Correlation Between Amtran Technology and Asustek Computer

Can any of the company-specific risk be diversified away by investing in both Amtran Technology and Asustek Computer 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 Asustek Computer 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 Asustek Computer, you can compare the effects of market volatilities on Amtran Technology and Asustek Computer 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 Asustek Computer. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amtran Technology and Asustek Computer.

Diversification Opportunities for Amtran Technology and Asustek Computer

0.84

Correlation Coefficient

Amtran Technology  Asustek Computer

Very poor diversification

The 3 months correlation between Amtran and Asustek is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Amtran Technology Co and Asustek Computer in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Asustek Computer 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 Asustek Computer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Asustek Computer has no effect on the direction of Amtran Technology i.e., Amtran Technology and Asustek Computer go up and down completely randomly.

Pair Corralation between Amtran Technology and Asustek Computer

Assuming the 90 days trading horizon Amtran Technology Co is expected to generate 1.32 times more return on investment than Asustek Computer. However, Amtran Technology is 1.32 times more volatile than Asustek Computer. It trades about 0.18 of its potential returns per unit of risk. Asustek Computer is currently generating about 0.09 per unit of risk. If you would invest  1,490  in Amtran Technology Co on March 4, 2024 and sell it today you would earn a total of  585.00  from holding Amtran Technology Co or generate 39.26% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	100.0%
Values	Daily Returns

Amtran Technology Co  vs.  Asustek Computer

Amtran Technology

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Amtran Technology Co are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Amtran Technology showed solid returns over the last few months and may actually be approaching a breakup point.

Asustek Computer

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Asustek Computer are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Asustek Computer showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Amtran Technology and Asustek Computer

The main advantage of trading using opposite Amtran Technology and Asustek Computer positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amtran Technology position performs unexpectedly, Asustek Computer 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 Asustek Computer will offset losses from the drop in Asustek Computer's long position.

The idea behind Amtran Technology Co and Asustek Computer 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.

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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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.