Correlation Between Altek Corp and Gemtek Technology
Can any of the company-specific risk be diversified away by investing in both Altek Corp and Gemtek Technology 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 Altek Corp and Gemtek Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Altek Corp and Gemtek Technology Co, you can compare the effects of market volatilities on Altek Corp and Gemtek Technology 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 Altek Corp with a short position of Gemtek Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Altek Corp and Gemtek Technology.
Diversification Opportunities for Altek Corp and Gemtek Technology
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Altek and Gemtek is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Altek Corp and Gemtek Technology Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gemtek Technology and Altek Corp 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 Altek Corp are associated (or correlated) with Gemtek Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gemtek Technology has no effect on the direction of Altek Corp i.e., Altek Corp and Gemtek Technology go up and down completely randomly.
Pair Corralation between Altek Corp and Gemtek Technology
Assuming the 90 days trading horizon Altek Corp is expected to under-perform the Gemtek Technology. But the stock apears to be less risky and, when comparing its historical volatility, Altek Corp is 1.04 times less risky than Gemtek Technology. The stock trades about -0.26 of its potential returns per unit of risk. The Gemtek Technology Co is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest 3,545 in Gemtek Technology Co on September 12, 2024 and sell it today you would lose (60.00) from holding Gemtek Technology Co or give up 1.69% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Altek Corp vs. Gemtek Technology Co
Performance |
| Timeline |
| Altek Corp |
| Gemtek Technology |
Altek Corp and Gemtek Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Altek Corp and Gemtek Technology
The main advantage of trading using opposite Altek Corp and Gemtek Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Altek Corp position performs unexpectedly, Gemtek Technology 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 Gemtek Technology will offset losses from the drop in Gemtek Technology's long position.| Altek Corp vs. Ability Enterprise Co | Altek Corp vs. Sunplus Technology Co | Altek Corp vs. ALi Corp | Altek Corp vs. Edom Technology Co |
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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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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