Correlation Between Amtran Technology and Allis Electric
Can any of the company-specific risk be diversified away by investing in both Amtran Technology and Allis Electric 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 Amtran Technology and Allis Electric into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Amtran Technology Co and Allis Electric Co, you can compare the effects of market volatilities on Amtran Technology and Allis Electric 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 Amtran Technology with a short position of Allis Electric. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amtran Technology and Allis Electric.
Diversification Opportunities for Amtran Technology and Allis Electric
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Amtran and Allis is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Amtran Technology Co and Allis Electric Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Allis Electric and Amtran Technology 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 Amtran Technology Co are associated (or correlated) with Allis Electric. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Allis Electric has no effect on the direction of Amtran Technology i.e., Amtran Technology and Allis Electric go up and down completely randomly.
Pair Corralation between Amtran Technology and Allis Electric
Assuming the 90 days trading horizon Amtran Technology is expected to generate 1.53 times less return on investment than Allis Electric. But when comparing it to its historical volatility, Amtran Technology Co is 1.25 times less risky than Allis Electric. It trades about 0.06 of its potential returns per unit of risk. Allis Electric Co is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 6,020 in Allis Electric Co on August 26, 2024 and sell it today you would earn a total of 4,930 from holding Allis Electric Co or generate 81.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Amtran Technology Co vs. Allis Electric Co
Performance |
| Timeline |
| Amtran Technology |
| Allis Electric |
Amtran Technology and Allis Electric Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Amtran Technology and Allis Electric
The main advantage of trading using opposite Amtran Technology and Allis Electric positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amtran Technology position performs unexpectedly, Allis Electric 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 Allis Electric will offset losses from the drop in Allis Electric's long position.| Amtran Technology vs. Taiwan Semiconductor Manufacturing | Amtran Technology vs. Hon Hai Precision | Amtran Technology vs. MediaTek | Amtran Technology vs. Chunghwa Telecom Co |
| Allis Electric vs. Sunny Friend Environmental | Allis Electric vs. TTET Union Corp | Allis Electric vs. ECOVE Environment Corp | Allis Electric vs. Yulon Finance Corp |
Check out your portfolio center.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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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