Correlation Between Automatic Bank and Sure Tech

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

By analyzing existing cross correlation between Automatic Bank Services and Sure Tech Investments LP, you can compare the effects of market volatilities on Automatic Bank and Sure Tech 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 Automatic Bank with a short position of Sure Tech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Automatic Bank and Sure Tech.

Diversification Opportunities for Automatic Bank and Sure Tech

0.48

Correlation Coefficient

Automatic Bank  Sure Tech

Very weak diversification

The 3 months correlation between Automatic and Sure is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Automatic Bank Services and Sure Tech Investments LP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sure Tech Investments and Automatic Bank 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 Automatic Bank Services are associated (or correlated) with Sure Tech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sure Tech Investments has no effect on the direction of Automatic Bank i.e., Automatic Bank and Sure Tech go up and down completely randomly.

Pair Corralation between Automatic Bank and Sure Tech

Assuming the 90 days trading horizon Automatic Bank Services is expected to generate 0.76 times more return on investment than Sure Tech. However, Automatic Bank Services is 1.32 times less risky than Sure Tech. It trades about 0.22 of its potential returns per unit of risk. Sure Tech Investments LP is currently generating about 0.04 per unit of risk. If you would invest  227,300  in Automatic Bank Services on December 2, 2024 and sell it today you would earn a total of  71,500  from holding Automatic Bank Services or generate 31.46% return on investment over 90 days.

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

Automatic Bank Services  vs.  Sure Tech Investments LP

Automatic Bank Services

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Automatic Bank Services are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, Automatic Bank sustained solid returns over the last few months and may actually be approaching a breakup point.

Sure Tech Investments

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Sure Tech Investments LP are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Sure Tech may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Automatic Bank and Sure Tech

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

The idea behind Automatic Bank Services and Sure Tech Investments LP 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.