Correlation Between Gem Terminal and Amtran Technology

Can any of the company-specific risk be diversified away by investing in both Gem Terminal and Amtran Technology 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 Gem Terminal and Amtran Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Gem Terminal Industry and Amtran Technology Co, you can compare the effects of market volatilities on Gem Terminal and Amtran Technology 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 Gem Terminal with a short position of Amtran Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gem Terminal and Amtran Technology.

Diversification Opportunities for Gem Terminal and Amtran Technology

0.87

Correlation Coefficient

Gem Terminal  Amtran Technology

Very poor diversification

The 3 months correlation between Gem and Amtran is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Gem Terminal Industry and Amtran Technology Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amtran Technology and Gem Terminal 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 Gem Terminal Industry are associated (or correlated) with Amtran Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amtran Technology has no effect on the direction of Gem Terminal i.e., Gem Terminal and Amtran Technology go up and down completely randomly.

Pair Corralation between Gem Terminal and Amtran Technology

Assuming the 90 days trading horizon Gem Terminal Industry is expected to under-perform the Amtran Technology. In addition to that, Gem Terminal is 1.52 times more volatile than Amtran Technology Co. It trades about -0.15 of its total potential returns per unit of risk. Amtran Technology Co is currently generating about -0.07 per unit of volatility. If you would invest  1,950  in Amtran Technology Co on October 1, 2024 and sell it today you would lose (40.00) from holding Amtran Technology Co or give up 2.05% of portfolio value over 90 days.

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

Gem Terminal Industry  vs.  Amtran Technology Co

Gem Terminal Industry

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Gem Terminal Industry 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.

Amtran Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Amtran Technology Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Pair Trading with Gem Terminal and Amtran Technology

The main advantage of trading using opposite Gem Terminal and Amtran Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gem Terminal position performs unexpectedly, Amtran Technology 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 Amtran Technology will offset losses from the drop in Amtran Technology's long position.

The idea behind Gem Terminal Industry and Amtran Technology Co 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.

Check out your portfolio center.

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 Equity Valuation module to check real value of public entities based on technical and fundamental data.