Correlation Between Altek Corp and Aiptek International

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

By analyzing existing cross correlation between Altek Corp and Aiptek International, you can compare the effects of market volatilities on Altek Corp and Aiptek International 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 Aiptek International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Altek Corp and Aiptek International.

Diversification Opportunities for Altek Corp and Aiptek International

-0.27

Correlation Coefficient

Altek Corp  Aiptek International

Very good diversification

The 3 months correlation between Altek and Aiptek is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Altek Corp and Aiptek International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aiptek International 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 Aiptek International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aiptek International has no effect on the direction of Altek Corp i.e., Altek Corp and Aiptek International go up and down completely randomly.

Pair Corralation between Altek Corp and Aiptek International

Assuming the 90 days trading horizon Altek Corp is expected to generate 0.9 times more return on investment than Aiptek International. However, Altek Corp is 1.11 times less risky than Aiptek International. It trades about 0.08 of its potential returns per unit of risk. Aiptek International is currently generating about -0.01 per unit of risk. If you would invest  3,390  in Altek Corp on October 10, 2024 and sell it today you would earn a total of  455.00  from holding Altek Corp or generate 13.42% return on investment over 90 days.

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

Altek Corp  vs.  Aiptek International

Altek Corp

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Altek Corp are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Altek Corp showed solid returns over the last few months and may actually be approaching a breakup point.

Aiptek International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aiptek International has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Aiptek International 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 Aiptek International

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

The idea behind Altek Corp and Aiptek International 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.