Correlation Between American Premium and Alamo
Can any of the company-specific risk be diversified away by investing in both American Premium and Alamo 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 Premium and Alamo into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Premium Water and Alamo Group, you can compare the effects of market volatilities on American Premium and Alamo 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 Premium with a short position of Alamo. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Premium and Alamo.
Diversification Opportunities for American Premium and Alamo
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between American and Alamo is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding American Premium Water and Alamo Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alamo Group and American Premium 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 Premium Water are associated (or correlated) with Alamo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alamo Group has no effect on the direction of American Premium i.e., American Premium and Alamo go up and down completely randomly.
Pair Corralation between American Premium and Alamo
Given the investment horizon of 90 days American Premium Water is expected to generate 100.44 times more return on investment than Alamo. However, American Premium is 100.44 times more volatile than Alamo Group. It trades about 0.19 of its potential returns per unit of risk. Alamo Group is currently generating about 0.02 per unit of risk. If you would invest 0.03 in American Premium Water on August 30, 2024 and sell it today you would lose (0.02) from holding American Premium Water or give up 66.67% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 86.55% |
| Values | Daily Returns |
American Premium Water vs. Alamo Group
Performance |
| Timeline |
| American Premium Water |
| Alamo Group |
American Premium and Alamo Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Premium and Alamo
The main advantage of trading using opposite American Premium and Alamo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Premium position performs unexpectedly, Alamo 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 Alamo will offset losses from the drop in Alamo's long position.| American Premium vs. SPENN Technology AS | American Premium vs. OFX Group Ltd | American Premium vs. Cypherpunk Holdings | American Premium vs. Cathedra Bitcoin |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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