Correlation Between Sack Lunch and TransAKT

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

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

Diversification Opportunities for Sack Lunch and TransAKT

0.47

Correlation Coefficient

Sack Lunch  TransAKT

Very weak diversification

The 3 months correlation between Sack and TransAKT is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Sack Lunch Productions and TransAKT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TransAKT and Sack Lunch 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 Sack Lunch Productions are associated (or correlated) with TransAKT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TransAKT has no effect on the direction of Sack Lunch i.e., Sack Lunch and TransAKT go up and down completely randomly.

Pair Corralation between Sack Lunch and TransAKT

Given the investment horizon of 90 days Sack Lunch Productions is expected to under-perform the TransAKT. But the pink sheet apears to be less risky and, when comparing its historical volatility, Sack Lunch Productions is 14.49 times less risky than TransAKT. The pink sheet trades about -0.01 of its potential returns per unit of risk. The TransAKT is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  1.01  in TransAKT on September 14, 2024 and sell it today you would lose (0.51) from holding TransAKT or give up 50.5% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.44%
Values	Daily Returns

Sack Lunch Productions  vs.  TransAKT

Sack Lunch Productions

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sack Lunch Productions has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, Sack Lunch is not utilizing all of its potentials. The newest stock price mess, may contribute to short-term losses for the institutional investors.

TransAKT

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in TransAKT are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather inconsistent forward-looking signals, TransAKT exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sack Lunch and TransAKT

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

The idea behind Sack Lunch Productions and TransAKT 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.