Correlation Between ATrack Technology and HTC Corp

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

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

Diversification Opportunities for ATrack Technology and HTC Corp

-0.28

Correlation Coefficient

ATrack Technology  HTC Corp

Very good diversification

The 3 months correlation between ATrack and HTC is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding ATrack Technology and HTC Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HTC Corp and ATrack 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 ATrack Technology are associated (or correlated) with HTC Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HTC Corp has no effect on the direction of ATrack Technology i.e., ATrack Technology and HTC Corp go up and down completely randomly.

Pair Corralation between ATrack Technology and HTC Corp

Assuming the 90 days trading horizon ATrack Technology is expected to generate 1.87 times less return on investment than HTC Corp. In addition to that, ATrack Technology is 1.99 times more volatile than HTC Corp. It trades about 0.01 of its total potential returns per unit of risk. HTC Corp is currently generating about 0.03 per unit of volatility. If you would invest  4,555  in HTC Corp on October 8, 2024 and sell it today you would earn a total of  365.00  from holding HTC Corp or generate 8.01% return on investment over 90 days.

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

ATrack Technology  vs.  HTC Corp

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.

HTC Corp

Risk-Adjusted Performance

0 of 100

Very Weak

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

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

The idea behind ATrack Technology and HTC Corp 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.