Correlation Between Amtran Technology and Shieh Yih

Can any of the company-specific risk be diversified away by investing in both Amtran Technology and Shieh Yih 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 Shieh Yih 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 Shieh Yih Machinery, you can compare the effects of market volatilities on Amtran Technology and Shieh Yih 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 Shieh Yih. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amtran Technology and Shieh Yih.

Diversification Opportunities for Amtran Technology and Shieh Yih

0.34

Correlation Coefficient

Amtran Technology  Shieh Yih

Weak diversification

The 3 months correlation between Amtran and Shieh is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Amtran Technology Co and Shieh Yih Machinery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shieh Yih Machinery 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 Shieh Yih. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shieh Yih Machinery has no effect on the direction of Amtran Technology i.e., Amtran Technology and Shieh Yih go up and down completely randomly.

Pair Corralation between Amtran Technology and Shieh Yih

Assuming the 90 days trading horizon Amtran Technology Co is expected to under-perform the Shieh Yih. But the stock apears to be less risky and, when comparing its historical volatility, Amtran Technology Co is 1.43 times less risky than Shieh Yih. The stock trades about -0.08 of its potential returns per unit of risk. The Shieh Yih Machinery is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  3,870  in Shieh Yih Machinery on December 24, 2024 and sell it today you would lose (45.00) from holding Shieh Yih Machinery or give up 1.16% of portfolio value over 90 days.

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

Amtran Technology Co  vs.  Shieh Yih Machinery

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 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.

Shieh Yih Machinery

Risk-Adjusted Performance

Very Weak

Over the last 90 days Shieh Yih Machinery has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Shieh Yih is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Amtran Technology and Shieh Yih

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

The idea behind Amtran Technology Co and Shieh Yih Machinery 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.