Correlation Between Technology One and Ambertech

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

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

Diversification Opportunities for Technology One and Ambertech

-0.77

Correlation Coefficient

Technology One  Ambertech

Pay attention - limited upside

The 3 months correlation between Technology and Ambertech is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding Technology One and Ambertech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ambertech and Technology One 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 Technology One are associated (or correlated) with Ambertech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ambertech has no effect on the direction of Technology One i.e., Technology One and Ambertech go up and down completely randomly.

Pair Corralation between Technology One and Ambertech

Assuming the 90 days trading horizon Technology One is expected to generate 0.39 times more return on investment than Ambertech. However, Technology One is 2.56 times less risky than Ambertech. It trades about 0.19 of its potential returns per unit of risk. Ambertech is currently generating about -0.03 per unit of risk. If you would invest  1,517  in Technology One on October 8, 2024 and sell it today you would earn a total of  1,549  from holding Technology One or generate 102.11% return on investment over 90 days.

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

Technology One  vs.  Ambertech

Technology One

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Technology One are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain technical and fundamental indicators, Technology One unveiled solid returns over the last few months and may actually be approaching a breakup point.

Ambertech

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ambertech has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Technology One and Ambertech

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

The idea behind Technology One and Ambertech 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.