Correlation Between Alpha Networks and CyberTAN Technology

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

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

Diversification Opportunities for Alpha Networks and CyberTAN Technology

0.17

Correlation Coefficient

Alpha Networks  CyberTAN Technology

Average diversification

The 3 months correlation between Alpha and CyberTAN is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Alpha Networks and CyberTAN Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CyberTAN Technology and Alpha Networks 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 Alpha Networks are associated (or correlated) with CyberTAN Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CyberTAN Technology has no effect on the direction of Alpha Networks i.e., Alpha Networks and CyberTAN Technology go up and down completely randomly.

Pair Corralation between Alpha Networks and CyberTAN Technology

Assuming the 90 days trading horizon Alpha Networks is expected to under-perform the CyberTAN Technology. But the stock apears to be less risky and, when comparing its historical volatility, Alpha Networks is 1.05 times less risky than CyberTAN Technology. The stock trades about -0.06 of its potential returns per unit of risk. The CyberTAN Technology is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  3,200  in CyberTAN Technology on October 9, 2024 and sell it today you would earn a total of  120.00  from holding CyberTAN Technology or generate 3.75% return on investment over 90 days.

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

Alpha Networks  vs.  CyberTAN Technology

Alpha Networks

Risk-Adjusted Performance

0 of 100

Very Weak

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

CyberTAN Technology

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in CyberTAN Technology are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, CyberTAN Technology may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Alpha Networks and CyberTAN Technology

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

The idea behind Alpha Networks and CyberTAN Technology 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.

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 Bonds Directory module to find actively traded corporate debentures issued by US companies.