Correlation Between KAR Auction and Mastech Holdings
Can any of the company-specific risk be diversified away by investing in both KAR Auction and Mastech Holdings 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 KAR Auction and Mastech Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KAR Auction Services and Mastech Holdings, you can compare the effects of market volatilities on KAR Auction and Mastech Holdings 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 KAR Auction with a short position of Mastech Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of KAR Auction and Mastech Holdings.
Diversification Opportunities for KAR Auction and Mastech Holdings
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between KAR and Mastech is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding KAR Auction Services and Mastech Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mastech Holdings and KAR Auction 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 KAR Auction Services are associated (or correlated) with Mastech Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mastech Holdings has no effect on the direction of KAR Auction i.e., KAR Auction and Mastech Holdings go up and down completely randomly.
Pair Corralation between KAR Auction and Mastech Holdings
Considering the 90-day investment horizon KAR Auction is expected to generate 2.76 times less return on investment than Mastech Holdings. But when comparing it to its historical volatility, KAR Auction Services is 2.28 times less risky than Mastech Holdings. It trades about 0.17 of its potential returns per unit of risk. Mastech Holdings is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 1,010 in Mastech Holdings on August 28, 2024 and sell it today you would earn a total of 572.00 from holding Mastech Holdings or generate 56.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
KAR Auction Services vs. Mastech Holdings
Performance |
| Timeline |
| KAR Auction Services |
| Mastech Holdings |
KAR Auction and Mastech Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KAR Auction and Mastech Holdings
The main advantage of trading using opposite KAR Auction and Mastech Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KAR Auction position performs unexpectedly, Mastech Holdings 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 Mastech Holdings will offset losses from the drop in Mastech Holdings' long position.| KAR Auction vs. Bassett Furniture Industries | KAR Auction vs. Hooker Furniture | KAR Auction vs. Natuzzi SpA | KAR Auction vs. Flexsteel Industries |
| Mastech Holdings vs. EVI Industries | Mastech Holdings vs. LGL Group | Mastech Holdings vs. BG Staffing | Mastech Holdings vs. Issuer Direct 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
Other Complementary Tools
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments | |
| Crypto Correlations Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins | |
| Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges |