Correlation Between Ju Teng and Altek Corp

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

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

Diversification Opportunities for Ju Teng and Altek Corp

0.78

Correlation Coefficient

Ju Teng  Altek Corp

Poor diversification

The 3 months correlation between 9136 and Altek is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Ju Teng International and Altek Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Altek Corp and Ju Teng 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 Ju Teng International are associated (or correlated) with Altek Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Altek Corp has no effect on the direction of Ju Teng i.e., Ju Teng and Altek Corp go up and down completely randomly.

Pair Corralation between Ju Teng and Altek Corp

Assuming the 90 days trading horizon Ju Teng is expected to generate 1.87 times less return on investment than Altek Corp. But when comparing it to its historical volatility, Ju Teng International is 1.6 times less risky than Altek Corp. It trades about 0.19 of its potential returns per unit of risk. Altek Corp is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest  3,132  in Altek Corp on December 2, 2024 and sell it today you would earn a total of  1,698  from holding Altek Corp or generate 54.21% return on investment over 90 days.

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

Ju Teng International  vs.  Altek Corp

Ju Teng International

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Ju Teng International are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Ju Teng showed solid returns over the last few months and may actually be approaching a breakup point.

Altek Corp

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Altek Corp are ranked lower than 17 (%) 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.

Pair Trading with Ju Teng and Altek Corp

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

The idea behind Ju Teng International and Altek 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.

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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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..