Correlation Between Ampleforth and American Pacific
Can any of the company-specific risk be diversified away by investing in both Ampleforth and American Pacific 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 Ampleforth and American Pacific into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ampleforth and American Pacific Mining, you can compare the effects of market volatilities on Ampleforth and American Pacific 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 Ampleforth with a short position of American Pacific. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ampleforth and American Pacific.
Diversification Opportunities for Ampleforth and American Pacific
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Ampleforth and American is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Ampleforth and American Pacific Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Pacific Mining and Ampleforth 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 Ampleforth are associated (or correlated) with American Pacific. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Pacific Mining has no effect on the direction of Ampleforth i.e., Ampleforth and American Pacific go up and down completely randomly.
Pair Corralation between Ampleforth and American Pacific
Assuming the 90 days trading horizon Ampleforth is expected to generate 0.95 times more return on investment than American Pacific. However, Ampleforth is 1.06 times less risky than American Pacific. It trades about 0.03 of its potential returns per unit of risk. American Pacific Mining is currently generating about 0.01 per unit of risk. If you would invest 121.00 in Ampleforth on September 12, 2024 and sell it today you would earn a total of 0.00 from holding Ampleforth or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 45.58% |
| Values | Daily Returns |
Ampleforth vs. American Pacific Mining
Performance |
| Timeline |
| Ampleforth |
| American Pacific Mining |
Ampleforth and American Pacific Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ampleforth and American Pacific
The main advantage of trading using opposite Ampleforth and American Pacific positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ampleforth position performs unexpectedly, American Pacific 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 Pacific will offset losses from the drop in American Pacific's long position.The idea behind Ampleforth and American Pacific Mining 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.| American Pacific vs. Westward Gold | American Pacific vs. Heliostar Metals | American Pacific vs. Revival Gold | American Pacific vs. Cabral Gold |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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