Correlation Between CEA Industries and AmeraMex International
Can any of the company-specific risk be diversified away by investing in both CEA Industries and AmeraMex International 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 CEA Industries and AmeraMex International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CEA Industries Warrant and AmeraMex International, you can compare the effects of market volatilities on CEA Industries and AmeraMex International 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 CEA Industries with a short position of AmeraMex International. Check out your portfolio center. Please also check ongoing floating volatility patterns of CEA Industries and AmeraMex International.
Diversification Opportunities for CEA Industries and AmeraMex International
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between CEA and AmeraMex is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding CEA Industries Warrant and AmeraMex International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AmeraMex International and CEA Industries 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 CEA Industries Warrant are associated (or correlated) with AmeraMex International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AmeraMex International has no effect on the direction of CEA Industries i.e., CEA Industries and AmeraMex International go up and down completely randomly.
Pair Corralation between CEA Industries and AmeraMex International
Assuming the 90 days horizon CEA Industries Warrant is expected to generate 14.22 times more return on investment than AmeraMex International. However, CEA Industries is 14.22 times more volatile than AmeraMex International. It trades about 0.14 of its potential returns per unit of risk. AmeraMex International is currently generating about 0.03 per unit of risk. If you would invest 15.00 in CEA Industries Warrant on September 2, 2024 and sell it today you would lose (14.21) from holding CEA Industries Warrant or give up 94.73% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 52.22% |
| Values | Daily Returns |
CEA Industries Warrant vs. AmeraMex International
Performance |
| Timeline |
| CEA Industries Warrant |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Solid
| AmeraMex International |
CEA Industries and AmeraMex International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CEA Industries and AmeraMex International
The main advantage of trading using opposite CEA Industries and AmeraMex International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CEA Industries position performs unexpectedly, AmeraMex International 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 AmeraMex International will offset losses from the drop in AmeraMex International's long position.| CEA Industries vs. Nikola Corp | CEA Industries vs. Wabash National | CEA Industries vs. Titan International | CEA Industries vs. Deere Company |
| AmeraMex International vs. First Tractor | AmeraMex International vs. Ag Growth International | AmeraMex International vs. Arts Way Manufacturing Co | AmeraMex International vs. American Premium Water |
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 CEOs Directory module to screen CEOs from public companies around the world.
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