Correlation Between KORE Group and Alta Equipment

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

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

Diversification Opportunities for KORE Group and Alta Equipment

-0.57

Correlation Coefficient

KORE Group  Alta Equipment

Excellent diversification

The 3 months correlation between KORE and Alta is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding KORE Group Holdings and Alta Equipment Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alta Equipment Group and KORE Group 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 KORE Group Holdings are associated (or correlated) with Alta Equipment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alta Equipment Group has no effect on the direction of KORE Group i.e., KORE Group and Alta Equipment go up and down completely randomly.

Pair Corralation between KORE Group and Alta Equipment

Given the investment horizon of 90 days KORE Group Holdings is expected to under-perform the Alta Equipment. In addition to that, KORE Group is 1.25 times more volatile than Alta Equipment Group. It trades about -0.09 of its total potential returns per unit of risk. Alta Equipment Group is currently generating about 0.1 per unit of volatility. If you would invest  640.00  in Alta Equipment Group on September 3, 2024 and sell it today you would earn a total of  151.00  from holding Alta Equipment Group or generate 23.59% return on investment over 90 days.

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

KORE Group Holdings  vs.  Alta Equipment Group

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 conflicting performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

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 uncertain basic indicators, Alta Equipment reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with KORE Group and Alta Equipment

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

The idea behind KORE Group Holdings and Alta Equipment Group 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.