Correlation Between TransAKT and American Leisure

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

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

Diversification Opportunities for TransAKT and American Leisure

-0.1

Correlation Coefficient

TransAKT  American Leisure

Good diversification

The 3 months correlation between TransAKT and American is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding TransAKT and American Leisure Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Leisure Holdings and TransAKT 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 TransAKT are associated (or correlated) with American Leisure. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Leisure Holdings has no effect on the direction of TransAKT i.e., TransAKT and American Leisure go up and down completely randomly.

Pair Corralation between TransAKT and American Leisure

Given the investment horizon of 90 days TransAKT is expected to generate 3.81 times more return on investment than American Leisure. However, TransAKT is 3.81 times more volatile than American Leisure Holdings. It trades about 0.16 of its potential returns per unit of risk. American Leisure Holdings is currently generating about 0.19 per unit of risk. If you would invest  0.51  in TransAKT on September 28, 2024 and sell it today you would lose (0.24) from holding TransAKT or give up 47.06% of portfolio value over 90 days.

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

TransAKT  vs.  American Leisure Holdings

TransAKT

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in TransAKT are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of rather inconsistent forward-looking signals, TransAKT exhibited solid returns over the last few months and may actually be approaching a breakup point.

American Leisure Holdings

Risk-Adjusted Performance

15 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in American Leisure Holdings are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite fairly abnormal essential indicators, American Leisure demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with TransAKT and American Leisure

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

The idea behind TransAKT and American Leisure Holdings 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.