Correlation Between AmpliTech and NETGEAR

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

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

Diversification Opportunities for AmpliTech and NETGEAR

0.68

Correlation Coefficient

AmpliTech  NETGEAR

Poor diversification

The 3 months correlation between AmpliTech and NETGEAR is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding AmpliTech Group and NETGEAR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NETGEAR and AmpliTech 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 AmpliTech Group are associated (or correlated) with NETGEAR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NETGEAR has no effect on the direction of AmpliTech i.e., AmpliTech and NETGEAR go up and down completely randomly.

Pair Corralation between AmpliTech and NETGEAR

Assuming the 90 days horizon AmpliTech Group is expected to generate 10.06 times more return on investment than NETGEAR. However, AmpliTech is 10.06 times more volatile than NETGEAR. It trades about 0.18 of its potential returns per unit of risk. NETGEAR is currently generating about 0.16 per unit of risk. If you would invest  4.60  in AmpliTech Group on October 4, 2024 and sell it today you would earn a total of  82.40  from holding AmpliTech Group or generate 1791.3% return on investment over 90 days.

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

AmpliTech Group  vs.  NETGEAR

AmpliTech Group

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in AmpliTech Group are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal technical and fundamental indicators, AmpliTech showed solid returns over the last few months and may actually be approaching a breakup point.

NETGEAR

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in NETGEAR are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. Even with relatively unfluctuating technical and fundamental indicators, NETGEAR reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with AmpliTech and NETGEAR

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

The idea behind AmpliTech Group and NETGEAR 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.