Correlation Between Tat Techno and Auckland International

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

By analyzing existing cross correlation between Tat Techno and Auckland International Airport, you can compare the effects of market volatilities on Tat Techno and Auckland International 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 Tat Techno with a short position of Auckland International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tat Techno and Auckland International.

Diversification Opportunities for Tat Techno and Auckland International

0.62

Correlation Coefficient

Tat Techno  Auckland International

Poor diversification

The 3 months correlation between Tat and Auckland is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Tat Techno and Auckland International Airport in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Auckland International and Tat Techno 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 Tat Techno are associated (or correlated) with Auckland International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Auckland International has no effect on the direction of Tat Techno i.e., Tat Techno and Auckland International go up and down completely randomly.

Pair Corralation between Tat Techno and Auckland International

Given the investment horizon of 90 days Tat Techno is expected to generate 1.6 times more return on investment than Auckland International. However, Tat Techno is 1.6 times more volatile than Auckland International Airport. It trades about 0.05 of its potential returns per unit of risk. Auckland International Airport is currently generating about 0.04 per unit of risk. If you would invest  2,634  in Tat Techno on December 29, 2024 and sell it today you would earn a total of  186.00  from holding Tat Techno or generate 7.06% return on investment over 90 days.

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

Tat Techno  vs.  Auckland International Airport

Tat Techno

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Tat Techno are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Tat Techno may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Auckland International

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Auckland International Airport are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile basic indicators, Auckland International may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Tat Techno and Auckland International

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

The idea behind Tat Techno and Auckland International Airport 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.