Correlation Between Cricut and TransAct Technologies

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

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

Diversification Opportunities for Cricut and TransAct Technologies

0.64

Correlation Coefficient

Cricut  TransAct Technologies

Poor diversification

The 3 months correlation between Cricut and TransAct is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Cricut Inc and TransAct Technologies Incorpor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TransAct Technologies and Cricut 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 Cricut Inc are associated (or correlated) with TransAct Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TransAct Technologies has no effect on the direction of Cricut i.e., Cricut and TransAct Technologies go up and down completely randomly.

Pair Corralation between Cricut and TransAct Technologies

Given the investment horizon of 90 days Cricut Inc is expected to generate 1.09 times more return on investment than TransAct Technologies. However, Cricut is 1.09 times more volatile than TransAct Technologies Incorporated. It trades about 0.04 of its potential returns per unit of risk. TransAct Technologies Incorporated is currently generating about 0.03 per unit of risk. If you would invest  538.00  in Cricut Inc on September 23, 2024 and sell it today you would earn a total of  55.00  from holding Cricut Inc or generate 10.22% return on investment over 90 days.

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

Cricut Inc  vs.  TransAct Technologies Incorpor

Cricut Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cricut Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest inconsistent performance, the Stock's fundamental indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

TransAct Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days TransAct Technologies Incorporated has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's fundamental indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Cricut and TransAct Technologies

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

The idea behind Cricut Inc and TransAct Technologies Incorporated 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.