Correlation Between TransAct Technologies and Hooker Furniture

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

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

Diversification Opportunities for TransAct Technologies and Hooker Furniture

-0.14

Correlation Coefficient

TransAct Technologies  Hooker Furniture

Good diversification

The 3 months correlation between TransAct and Hooker is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding TransAct Technologies Incorpor and Hooker Furniture in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hooker Furniture and TransAct Technologies 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 TransAct Technologies Incorporated are associated (or correlated) with Hooker Furniture. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hooker Furniture has no effect on the direction of TransAct Technologies i.e., TransAct Technologies and Hooker Furniture go up and down completely randomly.

Pair Corralation between TransAct Technologies and Hooker Furniture

Given the investment horizon of 90 days TransAct Technologies Incorporated is expected to generate 0.71 times more return on investment than Hooker Furniture. However, TransAct Technologies Incorporated is 1.41 times less risky than Hooker Furniture. It trades about 0.1 of its potential returns per unit of risk. Hooker Furniture is currently generating about -0.04 per unit of risk. If you would invest  390.00  in TransAct Technologies Incorporated on September 17, 2024 and sell it today you would earn a total of  16.00  from holding TransAct Technologies Incorporated or generate 4.1% return on investment over 90 days.

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

TransAct Technologies Incorpor  vs.  Hooker Furniture

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 comparatively stable fundamental indicators, TransAct Technologies is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Hooker Furniture

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Hooker Furniture has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable technical and fundamental indicators, Hooker Furniture is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with TransAct Technologies and Hooker Furniture

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

The idea behind TransAct Technologies Incorporated and Hooker Furniture 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.