Correlation Between Amtran Technology and Bright Led

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

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

Diversification Opportunities for Amtran Technology and Bright Led

-0.24

Correlation Coefficient

Amtran Technology  Bright Led

Very good diversification

The 3 months correlation between Amtran and Bright is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Amtran Technology Co and Bright Led Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bright Led Electronics and Amtran Technology 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 Amtran Technology Co are associated (or correlated) with Bright Led. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bright Led Electronics has no effect on the direction of Amtran Technology i.e., Amtran Technology and Bright Led go up and down completely randomly.

Pair Corralation between Amtran Technology and Bright Led

Assuming the 90 days trading horizon Amtran Technology Co is expected to generate 0.73 times more return on investment than Bright Led. However, Amtran Technology Co is 1.37 times less risky than Bright Led. It trades about 0.27 of its potential returns per unit of risk. Bright Led Electronics is currently generating about 0.07 per unit of risk. If you would invest  1,775  in Amtran Technology Co on December 5, 2024 and sell it today you would earn a total of  135.00  from holding Amtran Technology Co or generate 7.61% return on investment over 90 days.

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

Amtran Technology Co  vs.  Bright Led Electronics

Amtran Technology

Risk-Adjusted Performance

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 fairly stable basic indicators, Amtran Technology is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Bright Led Electronics

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Bright Led Electronics are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Bright Led may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Amtran Technology and Bright Led

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

The idea behind Amtran Technology Co and Bright Led Electronics 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.