Correlation Between AMA Group and Dorman Products
Can any of the company-specific risk be diversified away by investing in both AMA Group and Dorman Products 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 AMA Group and Dorman Products into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AMA Group Limited and Dorman Products, you can compare the effects of market volatilities on AMA Group and Dorman Products 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 AMA Group with a short position of Dorman Products. Check out your portfolio center. Please also check ongoing floating volatility patterns of AMA Group and Dorman Products.
Diversification Opportunities for AMA Group and Dorman Products
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between AMA and Dorman is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding AMA Group Limited and Dorman Products in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dorman Products and AMA Group 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 AMA Group Limited are associated (or correlated) with Dorman Products. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dorman Products has no effect on the direction of AMA Group i.e., AMA Group and Dorman Products go up and down completely randomly.
Pair Corralation between AMA Group and Dorman Products
Assuming the 90 days horizon AMA Group Limited is expected to generate 37.83 times more return on investment than Dorman Products. However, AMA Group is 37.83 times more volatile than Dorman Products. It trades about 0.1 of its potential returns per unit of risk. Dorman Products is currently generating about 0.12 per unit of risk. If you would invest 0.02 in AMA Group Limited on September 12, 2024 and sell it today you would earn a total of 4.73 from holding AMA Group Limited or generate 23650.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.19% |
| Values | Daily Returns |
AMA Group Limited vs. Dorman Products
Performance |
| Timeline |
| AMA Group Limited |
| Dorman Products |
AMA Group and Dorman Products Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AMA Group and Dorman Products
The main advantage of trading using opposite AMA Group and Dorman Products positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AMA Group position performs unexpectedly, Dorman Products 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 Dorman Products will offset losses from the drop in Dorman Products' long position.| AMA Group vs. Adient PLC | AMA Group vs. Lear Corporation | AMA Group vs. Autoliv | AMA Group vs. American Axle Manufacturing |
| Dorman Products vs. Standard Motor Products | Dorman Products vs. Motorcar Parts of | Dorman Products vs. Douglas Dynamics | Dorman Products vs. Stoneridge |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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