Correlation Between Transphorm Technology and Asure Software

Can any of the company-specific risk be diversified away by investing in both Transphorm Technology and Asure Software 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 Transphorm Technology and Asure Software into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Transphorm Technology and Asure Software, you can compare the effects of market volatilities on Transphorm Technology and Asure Software 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 Transphorm Technology with a short position of Asure Software. Check out your portfolio center. Please also check ongoing floating volatility patterns of Transphorm Technology and Asure Software.

Diversification Opportunities for Transphorm Technology and Asure Software

0.06

Correlation Coefficient

Transphorm Technology  Asure Software

Significant diversification

The 3 months correlation between Transphorm and Asure is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Transphorm Technology and Asure Software in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Asure Software and Transphorm 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 Transphorm Technology are associated (or correlated) with Asure Software. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Asure Software has no effect on the direction of Transphorm Technology i.e., Transphorm Technology and Asure Software go up and down completely randomly.

Pair Corralation between Transphorm Technology and Asure Software

Given the investment horizon of 90 days Transphorm Technology is expected to generate 0.15 times more return on investment than Asure Software. However, Transphorm Technology is 6.77 times less risky than Asure Software. It trades about 0.01 of its potential returns per unit of risk. Asure Software is currently generating about -0.13 per unit of risk. If you would invest  488.00  in Transphorm Technology on February 17, 2024 and sell it today you would earn a total of  1.00  from holding Transphorm Technology or generate 0.2% return on investment over 90 days.

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

Transphorm Technology  vs.  Asure Software

Transphorm Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Transphorm Technology has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Transphorm Technology is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Asure Software

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Asure Software has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in June 2024. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Transphorm Technology and Asure Software

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

The idea behind Transphorm Technology and Asure Software 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.