Correlation Between AM EAGLE and China Water
Can any of the company-specific risk be diversified away by investing in both AM EAGLE and China Water 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 AM EAGLE and China Water into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AM EAGLE OUTFITTERS and China Water Affairs, you can compare the effects of market volatilities on AM EAGLE and China Water 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 AM EAGLE with a short position of China Water. Check out your portfolio center. Please also check ongoing floating volatility patterns of AM EAGLE and China Water.
Diversification Opportunities for AM EAGLE and China Water
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between AFG and China is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding AM EAGLE OUTFITTERS and China Water Affairs in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Water Affairs and AM EAGLE 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 AM EAGLE OUTFITTERS are associated (or correlated) with China Water. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Water Affairs has no effect on the direction of AM EAGLE i.e., AM EAGLE and China Water go up and down completely randomly.
Pair Corralation between AM EAGLE and China Water
Assuming the 90 days trading horizon AM EAGLE OUTFITTERS is expected to generate 0.96 times more return on investment than China Water. However, AM EAGLE OUTFITTERS is 1.05 times less risky than China Water. It trades about 0.14 of its potential returns per unit of risk. China Water Affairs is currently generating about -0.04 per unit of risk. If you would invest 1,760 in AM EAGLE OUTFITTERS on September 5, 2024 and sell it today you would earn a total of 160.00 from holding AM EAGLE OUTFITTERS or generate 9.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
AM EAGLE OUTFITTERS vs. China Water Affairs
Performance |
| Timeline |
| AM EAGLE OUTFITTERS |
| China Water Affairs |
AM EAGLE and China Water Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AM EAGLE and China Water
The main advantage of trading using opposite AM EAGLE and China Water positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AM EAGLE position performs unexpectedly, China Water 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 China Water will offset losses from the drop in China Water's long position.| AM EAGLE vs. Compagnie Plastic Omnium | AM EAGLE vs. ANGLER GAMING PLC | AM EAGLE vs. THRACE PLASTICS | AM EAGLE vs. GAMESTOP |
| China Water vs. Grupo Carso SAB | China Water vs. AM EAGLE OUTFITTERS | China Water vs. G III Apparel Group | China Water vs. Mitsui Chemicals |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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