Correlation Between Adams Resources and Aemetis
Can any of the company-specific risk be diversified away by investing in both Adams Resources and Aemetis 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 Adams Resources and Aemetis into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Adams Resources Energy and Aemetis, you can compare the effects of market volatilities on Adams Resources and Aemetis 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 Adams Resources with a short position of Aemetis. Check out your portfolio center. Please also check ongoing floating volatility patterns of Adams Resources and Aemetis.
Diversification Opportunities for Adams Resources and Aemetis
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Adams and Aemetis is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Adams Resources Energy and Aemetis in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aemetis and Adams Resources 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 Adams Resources Energy are associated (or correlated) with Aemetis. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aemetis has no effect on the direction of Adams Resources i.e., Adams Resources and Aemetis go up and down completely randomly.
Pair Corralation between Adams Resources and Aemetis
Allowing for the 90-day total investment horizon Adams Resources is expected to generate 3.54 times less return on investment than Aemetis. But when comparing it to its historical volatility, Adams Resources Energy is 2.11 times less risky than Aemetis. It trades about 0.02 of its potential returns per unit of risk. Aemetis is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 461.00 in Aemetis on August 27, 2024 and sell it today you would lose (58.00) from holding Aemetis or give up 12.58% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Adams Resources Energy vs. Aemetis
Performance |
| Timeline |
| Adams Resources Energy |
| Aemetis |
Adams Resources and Aemetis Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Adams Resources and Aemetis
The main advantage of trading using opposite Adams Resources and Aemetis positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Adams Resources position performs unexpectedly, Aemetis 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 Aemetis will offset losses from the drop in Aemetis' long position.| Adams Resources vs. Delek Energy | Adams Resources vs. Crossamerica Partners LP | Adams Resources vs. Valvoline | Adams Resources vs. Star Gas Partners |
| Aemetis vs. PBF Energy | Aemetis vs. Clean Energy Fuels | Aemetis vs. Par Pacific Holdings | Aemetis vs. Vertex Energy |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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