Correlation Between Alta Equipment and Encounter Technologi

Can any of the company-specific risk be diversified away by investing in both Alta Equipment and Encounter Technologi 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 Alta Equipment and Encounter Technologi into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Alta Equipment Group and Encounter Technologi, you can compare the effects of market volatilities on Alta Equipment and Encounter Technologi 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 Alta Equipment with a short position of Encounter Technologi. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alta Equipment and Encounter Technologi.

Diversification Opportunities for Alta Equipment and Encounter Technologi

0.0

Correlation Coefficient

Alta Equipment  Encounter Technologi

Pay attention - limited upside

The 3 months correlation between Alta and Encounter is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Alta Equipment Group and Encounter Technologi in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Encounter Technologi and Alta Equipment 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 Alta Equipment Group are associated (or correlated) with Encounter Technologi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Encounter Technologi has no effect on the direction of Alta Equipment i.e., Alta Equipment and Encounter Technologi go up and down completely randomly.

Pair Corralation between Alta Equipment and Encounter Technologi

If you would invest  670.00  in Alta Equipment Group on October 25, 2024 and sell it today you would earn a total of  58.00  from holding Alta Equipment Group or generate 8.66% return on investment over 90 days.

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

Alta Equipment Group  vs.  Encounter Technologi

Alta Equipment Group

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Alta Equipment Group are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Alta Equipment reported solid returns over the last few months and may actually be approaching a breakup point.

Encounter Technologi

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Encounter Technologi has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Encounter Technologi is not utilizing all of its potentials. The newest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Alta Equipment and Encounter Technologi

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

The idea behind Alta Equipment Group and Encounter Technologi 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.