Correlation Between Alta Equipment and KORE Group

Can any of the company-specific risk be diversified away by investing in both Alta Equipment and KORE Group 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 KORE Group 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 KORE Group Holdings, you can compare the effects of market volatilities on Alta Equipment and KORE Group 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 KORE Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alta Equipment and KORE Group.

Diversification Opportunities for Alta Equipment and KORE Group

-0.52

Correlation Coefficient

Alta Equipment  KORE Group

Excellent diversification

The 3 months correlation between Alta and KORE is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Alta Equipment Group and KORE Group Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KORE Group Holdings 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 KORE Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KORE Group Holdings has no effect on the direction of Alta Equipment i.e., Alta Equipment and KORE Group go up and down completely randomly.

Pair Corralation between Alta Equipment and KORE Group

Given the investment horizon of 90 days Alta Equipment Group is expected to generate 0.82 times more return on investment than KORE Group. However, Alta Equipment Group is 1.21 times less risky than KORE Group. It trades about 0.2 of its potential returns per unit of risk. KORE Group Holdings is currently generating about -0.15 per unit of risk. If you would invest  648.00  in Alta Equipment Group on August 31, 2024 and sell it today you would earn a total of  143.00  from holding Alta Equipment Group or generate 22.07% return on investment over 90 days.

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

Alta Equipment Group  vs.  KORE Group Holdings

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.

KORE Group Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days KORE Group Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of sluggish performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in December 2024. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Alta Equipment and KORE Group

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

The idea behind Alta Equipment Group and KORE Group Holdings 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.