Correlation Between Amtran Technology and ALi Corp
Can any of the company-specific risk be diversified away by investing in both Amtran Technology and ALi 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 Amtran Technology and ALi Corp 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 ALi Corp, you can compare the effects of market volatilities on Amtran Technology and ALi 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 Amtran Technology with a short position of ALi Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amtran Technology and ALi Corp.
Diversification Opportunities for Amtran Technology and ALi Corp
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Amtran and ALi is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Amtran Technology Co and ALi Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ALi Corp 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 ALi Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ALi Corp has no effect on the direction of Amtran Technology i.e., Amtran Technology and ALi Corp go up and down completely randomly.
Pair Corralation between Amtran Technology and ALi Corp
Assuming the 90 days trading horizon Amtran Technology Co is expected to generate 0.59 times more return on investment than ALi Corp. However, Amtran Technology Co is 1.71 times less risky than ALi Corp. It trades about -0.14 of its potential returns per unit of risk. ALi Corp is currently generating about -0.16 per unit of risk. If you would invest 1,870 in Amtran Technology Co on December 29, 2024 and sell it today you would lose (245.00) from holding Amtran Technology Co or give up 13.1% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 98.25% |
Values | Daily Returns |
Amtran Technology Co vs. ALi Corp
Performance |
Timeline |
Amtran Technology |
ALi Corp |
Amtran Technology and ALi Corp Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Amtran Technology and ALi Corp
The main advantage of trading using opposite Amtran Technology and ALi Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amtran Technology position performs unexpectedly, ALi 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 ALi Corp will offset losses from the drop in ALi Corp's long position.Amtran Technology vs. Jetwell Computer Co | Amtran Technology vs. RiTdisplay Corp | Amtran Technology vs. Asmedia Technology | Amtran Technology vs. Emerging Display Technologies |
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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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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