Correlation Between United Renewable and Amtran Technology
Can any of the company-specific risk be diversified away by investing in both United Renewable and Amtran 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 United Renewable and Amtran Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United Renewable Energy and Amtran Technology Co, you can compare the effects of market volatilities on United Renewable and Amtran 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 United Renewable with a short position of Amtran Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Renewable and Amtran Technology.
Diversification Opportunities for United Renewable and Amtran Technology
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between United and Amtran is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding United Renewable Energy and Amtran Technology Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amtran Technology and United Renewable 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 United Renewable Energy are associated (or correlated) with Amtran Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amtran Technology has no effect on the direction of United Renewable i.e., United Renewable and Amtran Technology go up and down completely randomly.
Pair Corralation between United Renewable and Amtran Technology
Assuming the 90 days trading horizon United Renewable Energy is expected to generate 1.15 times more return on investment than Amtran Technology. However, United Renewable is 1.15 times more volatile than Amtran Technology Co. It trades about -0.08 of its potential returns per unit of risk. Amtran Technology Co is currently generating about -0.17 per unit of risk. If you would invest 1,125 in United Renewable Energy on September 1, 2024 and sell it today you would lose (50.00) from holding United Renewable Energy or give up 4.44% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
United Renewable Energy vs. Amtran Technology Co
Performance |
| Timeline |
| United Renewable Energy |
| Amtran Technology |
United Renewable and Amtran Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Renewable and Amtran Technology
The main advantage of trading using opposite United Renewable and Amtran Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Renewable position performs unexpectedly, Amtran 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 Amtran Technology will offset losses from the drop in Amtran Technology's long position.The idea behind United Renewable Energy and Amtran Technology Co 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.| Amtran Technology vs. Chaintech Technology Corp | Amtran Technology vs. AVerMedia Technologies | Amtran Technology vs. Avision | Amtran Technology vs. Clevo Co |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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