Correlation Between Chia Her and Altek Corp

Can any of the company-specific risk be diversified away by investing in both Chia Her and Altek Corp at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Chia Her and Altek Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Chia Her Industrial and Altek Corp, you can compare the effects of market volatilities on Chia Her and Altek Corp and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Chia Her with a short position of Altek Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chia Her and Altek Corp.

Diversification Opportunities for Chia Her and Altek Corp

-0.79

Correlation Coefficient

Chia Her  Altek Corp

Pay attention - limited upside

The 3 months correlation between Chia and Altek is -0.79. Overlapping area represents the amount of risk that can be diversified away by holding Chia Her Industrial and Altek Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Altek Corp and Chia Her is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Chia Her Industrial are associated (or correlated) with Altek Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Altek Corp has no effect on the direction of Chia Her i.e., Chia Her and Altek Corp go up and down completely randomly.

Pair Corralation between Chia Her and Altek Corp

Assuming the 90 days trading horizon Chia Her Industrial is expected to generate 3.31 times more return on investment than Altek Corp. However, Chia Her is 3.31 times more volatile than Altek Corp. It trades about 0.16 of its potential returns per unit of risk. Altek Corp is currently generating about -0.16 per unit of risk. If you would invest  1,835  in Chia Her Industrial on September 12, 2024 and sell it today you would earn a total of  790.00  from holding Chia Her Industrial or generate 43.05% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Chia Her Industrial  vs.  Altek Corp

Chia Her Industrial

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Chia Her Industrial are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Chia Her showed solid returns over the last few months and may actually be approaching a breakup point.

Altek Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Altek Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Chia Her and Altek Corp

The main advantage of trading using opposite Chia Her and Altek Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chia Her position performs unexpectedly, Altek Corp can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Altek Corp will offset losses from the drop in Altek Corp's long position.

The idea behind Chia Her Industrial and Altek Corp pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Bonds Directory module to find actively traded corporate debentures issued by US companies.