Correlation Between Amtran Technology and Gemtek Technology

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

Diversification Opportunities for Amtran Technology and Gemtek Technology

0.61

Correlation Coefficient

Amtran Technology  Gemtek Technology

Poor diversification

The 3 months correlation between Amtran and Gemtek is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Amtran Technology Co and Gemtek Technology Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gemtek Technology 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 Gemtek Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gemtek Technology has no effect on the direction of Amtran Technology i.e., Amtran Technology and Gemtek Technology go up and down completely randomly.

Pair Corralation between Amtran Technology and Gemtek Technology

Assuming the 90 days trading horizon Amtran Technology Co is expected to generate 1.17 times more return on investment than Gemtek Technology. However, Amtran Technology is 1.17 times more volatile than Gemtek Technology Co. It trades about -0.09 of its potential returns per unit of risk. Gemtek Technology Co is currently generating about -0.13 per unit of risk. If you would invest  2,240  in Amtran Technology Co on September 3, 2024 and sell it today you would lose (285.00) from holding Amtran Technology Co or give up 12.72% of portfolio value over 90 days.

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

Amtran Technology Co  vs.  Gemtek Technology Co

Amtran Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Amtran Technology Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Gemtek Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Gemtek Technology Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Amtran Technology and Gemtek Technology

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

The idea behind Amtran Technology Co and Gemtek Technology Co 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.