Correlation Between Alta Equipment and AviChina Industry
Can any of the company-specific risk be diversified away by investing in both Alta Equipment and AviChina Industry 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 Alta Equipment and AviChina Industry into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alta Equipment Group and AviChina Industry Technology, you can compare the effects of market volatilities on Alta Equipment and AviChina Industry 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 Alta Equipment with a short position of AviChina Industry. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alta Equipment and AviChina Industry.
Diversification Opportunities for Alta Equipment and AviChina Industry
-0.7 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Alta and AviChina is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Alta Equipment Group and AviChina Industry Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AviChina Industry and Alta Equipment 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 Alta Equipment Group are associated (or correlated) with AviChina Industry. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AviChina Industry has no effect on the direction of Alta Equipment i.e., Alta Equipment and AviChina Industry go up and down completely randomly.
Pair Corralation between Alta Equipment and AviChina Industry
Given the investment horizon of 90 days Alta Equipment Group is expected to generate 1.19 times more return on investment than AviChina Industry. However, Alta Equipment is 1.19 times more volatile than AviChina Industry Technology. It trades about -0.09 of its potential returns per unit of risk. AviChina Industry Technology is currently generating about -0.22 per unit of risk. If you would invest 839.00 in Alta Equipment Group on September 12, 2024 and sell it today you would lose (71.00) from holding Alta Equipment Group or give up 8.46% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Alta Equipment Group vs. AviChina Industry Technology
Performance |
| Timeline |
| Alta Equipment Group |
| AviChina Industry |
Alta Equipment and AviChina Industry Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alta Equipment and AviChina Industry
The main advantage of trading using opposite Alta Equipment and AviChina Industry positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alta Equipment position performs unexpectedly, AviChina Industry 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 AviChina Industry will offset losses from the drop in AviChina Industry's long position.| Alta Equipment vs. PROG Holdings | Alta Equipment vs. GATX Corporation | Alta Equipment vs. McGrath RentCorp | Alta Equipment vs. Custom Truck One |
| AviChina Industry vs. John Wiley Sons | AviChina Industry vs. Ultra Clean Holdings | AviChina Industry vs. AMREP | AviChina Industry vs. 17 Education Technology |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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