Correlation Between Strong H and ATrack Technology

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

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

Diversification Opportunities for Strong H and ATrack Technology

-0.17

Correlation Coefficient

Strong H  ATrack Technology

Good diversification

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

Pair Corralation between Strong H and ATrack Technology

Assuming the 90 days trading horizon Strong H Machinery is expected to generate 0.11 times more return on investment than ATrack Technology. However, Strong H Machinery is 9.25 times less risky than ATrack Technology. It trades about -0.22 of its potential returns per unit of risk. ATrack Technology is currently generating about -0.12 per unit of risk. If you would invest  3,550  in Strong H Machinery on October 27, 2024 and sell it today you would lose (125.00) from holding Strong H Machinery or give up 3.52% of portfolio value over 90 days.

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

Strong H Machinery  vs.  ATrack Technology

Strong H Machinery

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Strong H Machinery are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Strong H is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

ATrack Technology

Risk-Adjusted Performance

0 of 100

Very Weak

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

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

The idea behind Strong H Machinery and ATrack 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.

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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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.