Correlation Between AmeraMex International and CEA Industries
Can any of the company-specific risk be diversified away by investing in both AmeraMex International and CEA Industries 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 AmeraMex International and CEA Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AmeraMex International and CEA Industries Warrant, you can compare the effects of market volatilities on AmeraMex International and CEA Industries 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 AmeraMex International with a short position of CEA Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of AmeraMex International and CEA Industries.
Diversification Opportunities for AmeraMex International and CEA Industries
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between AmeraMex and CEA is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding AmeraMex International and CEA Industries Warrant in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CEA Industries Warrant and AmeraMex International 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 AmeraMex International are associated (or correlated) with CEA Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CEA Industries Warrant has no effect on the direction of AmeraMex International i.e., AmeraMex International and CEA Industries go up and down completely randomly.
Pair Corralation between AmeraMex International and CEA Industries
Given the investment horizon of 90 days AmeraMex International is expected to generate 57.1 times less return on investment than CEA Industries. But when comparing it to its historical volatility, AmeraMex International is 16.95 times less risky than CEA Industries. It trades about 0.06 of its potential returns per unit of risk. CEA Industries Warrant is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 1.56 in CEA Industries Warrant on September 3, 2024 and sell it today you would lose (0.46) from holding CEA Industries Warrant or give up 29.49% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 46.15% |
| Values | Daily Returns |
AmeraMex International vs. CEA Industries Warrant
Performance |
| Timeline |
| AmeraMex International |
| CEA Industries Warrant |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Solid
AmeraMex International and CEA Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AmeraMex International and CEA Industries
The main advantage of trading using opposite AmeraMex International and CEA Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AmeraMex International position performs unexpectedly, CEA Industries 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 CEA Industries will offset losses from the drop in CEA Industries' long position.| AmeraMex International vs. Volvo AB ADR | AmeraMex International vs. Deere Company | AmeraMex International vs. Volvo AB ser | AmeraMex International vs. Deutsche Post AG |
| CEA Industries vs. CEA Industries | CEA Industries vs. Thayer Ventures Acquisition | CEA Industries vs. Iveda Solutions Warrant |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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