Correlation Between American Express and Acasti Pharma
Can any of the company-specific risk be diversified away by investing in both American Express and Acasti Pharma 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 American Express and Acasti Pharma into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Express and Acasti Pharma, you can compare the effects of market volatilities on American Express and Acasti Pharma 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 American Express with a short position of Acasti Pharma. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Express and Acasti Pharma.
Diversification Opportunities for American Express and Acasti Pharma
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between American and Acasti is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding American Express and Acasti Pharma in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Acasti Pharma and American Express 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 American Express are associated (or correlated) with Acasti Pharma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Acasti Pharma has no effect on the direction of American Express i.e., American Express and Acasti Pharma go up and down completely randomly.
Pair Corralation between American Express and Acasti Pharma
Considering the 90-day investment horizon American Express is expected to generate 0.45 times more return on investment than Acasti Pharma. However, American Express is 2.22 times less risky than Acasti Pharma. It trades about 0.13 of its potential returns per unit of risk. Acasti Pharma is currently generating about 0.01 per unit of risk. If you would invest 21,532 in American Express on September 1, 2024 and sell it today you would earn a total of 8,936 from holding American Express or generate 41.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 87.77% |
| Values | Daily Returns |
American Express vs. Acasti Pharma
Performance |
| Timeline |
| American Express |
| Acasti Pharma |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Good
American Express and Acasti Pharma Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Express and Acasti Pharma
The main advantage of trading using opposite American Express and Acasti Pharma positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Express position performs unexpectedly, Acasti Pharma 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 Acasti Pharma will offset losses from the drop in Acasti Pharma's long position.| American Express vs. 360 Finance | American Express vs. Atlanticus Holdings | American Express vs. Qudian Inc | American Express vs. Enova International |
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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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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