Correlation Between Altek Corp and Tainan Spinning

Can any of the company-specific risk be diversified away by investing in both Altek Corp and Tainan Spinning 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 Altek Corp and Tainan Spinning into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Altek Corp and Tainan Spinning Co, you can compare the effects of market volatilities on Altek Corp and Tainan Spinning 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 Altek Corp with a short position of Tainan Spinning. Check out your portfolio center. Please also check ongoing floating volatility patterns of Altek Corp and Tainan Spinning.

Diversification Opportunities for Altek Corp and Tainan Spinning

0.77

Correlation Coefficient

Altek Corp  Tainan Spinning

Poor diversification

The 3 months correlation between Altek and Tainan is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Altek Corp and Tainan Spinning Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tainan Spinning and Altek Corp 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 Altek Corp are associated (or correlated) with Tainan Spinning. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tainan Spinning has no effect on the direction of Altek Corp i.e., Altek Corp and Tainan Spinning go up and down completely randomly.

Pair Corralation between Altek Corp and Tainan Spinning

Assuming the 90 days trading horizon Altek Corp is expected to under-perform the Tainan Spinning. In addition to that, Altek Corp is 1.38 times more volatile than Tainan Spinning Co. It trades about -0.12 of its total potential returns per unit of risk. Tainan Spinning Co is currently generating about -0.03 per unit of volatility. If you would invest  1,565  in Tainan Spinning Co on September 5, 2024 and sell it today you would lose (35.00) from holding Tainan Spinning Co or give up 2.24% of portfolio value over 90 days.

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

Altek Corp  vs.  Tainan Spinning Co

Altek Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Altek Corp 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.

Tainan Spinning

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Tainan Spinning Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Tainan Spinning 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 Altek Corp and Tainan Spinning

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

The idea behind Altek Corp and Tainan Spinning 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.

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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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.