Correlation Between Amtran Technology and Tong Tai

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

Diversification Opportunities for Amtran Technology and Tong Tai

0.3

Correlation Coefficient

Amtran Technology  Tong Tai

Weak diversification

The 3 months correlation between Amtran and Tong is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Amtran Technology Co and Tong Tai Machine Tool in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tong Tai Machine 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 Tong Tai. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tong Tai Machine has no effect on the direction of Amtran Technology i.e., Amtran Technology and Tong Tai go up and down completely randomly.

Pair Corralation between Amtran Technology and Tong Tai

Assuming the 90 days trading horizon Amtran Technology Co is expected to generate 1.11 times more return on investment than Tong Tai. However, Amtran Technology is 1.11 times more volatile than Tong Tai Machine Tool. It trades about 0.06 of its potential returns per unit of risk. Tong Tai Machine Tool is currently generating about 0.06 per unit of risk. If you would invest  1,186  in Amtran Technology Co on March 10, 2024 and sell it today you would earn a total of  759.00  from holding Amtran Technology Co or generate 64.0% return on investment over 90 days.

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

Amtran Technology Co  vs.  Tong Tai Machine Tool

Amtran Technology

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Amtran Technology Co are ranked lower than 12 (%) 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.

Tong Tai Machine

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Tong Tai Machine Tool are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Tong Tai showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Amtran Technology and Tong Tai

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

The idea behind Amtran Technology Co and Tong Tai Machine Tool 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.

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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.