Correlation Between Getac Technology and National Aerospace

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

By analyzing existing cross correlation between Getac Technology Corp and National Aerospace Fasteners, you can compare the effects of market volatilities on Getac Technology and National Aerospace 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 Getac Technology with a short position of National Aerospace. Check out your portfolio center. Please also check ongoing floating volatility patterns of Getac Technology and National Aerospace.

Diversification Opportunities for Getac Technology and National Aerospace

-0.23

Correlation Coefficient

Getac Technology  National Aerospace

Very good diversification

The 3 months correlation between Getac and National is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Getac Technology Corp and National Aerospace Fasteners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Aerospace and Getac 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 Getac Technology Corp are associated (or correlated) with National Aerospace. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National Aerospace has no effect on the direction of Getac Technology i.e., Getac Technology and National Aerospace go up and down completely randomly.

Pair Corralation between Getac Technology and National Aerospace

Assuming the 90 days trading horizon Getac Technology Corp is expected to generate 1.13 times more return on investment than National Aerospace. However, Getac Technology is 1.13 times more volatile than National Aerospace Fasteners. It trades about 0.08 of its potential returns per unit of risk. National Aerospace Fasteners is currently generating about 0.03 per unit of risk. If you would invest  4,375  in Getac Technology Corp on September 24, 2024 and sell it today you would earn a total of  6,325  from holding Getac Technology Corp or generate 144.57% return on investment over 90 days.

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

Getac Technology Corp  vs.  National Aerospace Fasteners

Getac Technology Corp

Risk-Adjusted Performance

0 of 100

Very Weak

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

National Aerospace

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days National Aerospace Fasteners has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, National Aerospace 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 Getac Technology and National Aerospace

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

The idea behind Getac Technology Corp and National Aerospace Fasteners 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.