Correlation Between Park Electrochemical and AMREP
Can any of the company-specific risk be diversified away by investing in both Park Electrochemical and AMREP 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 Park Electrochemical and AMREP into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Park Electrochemical and AMREP, you can compare the effects of market volatilities on Park Electrochemical and AMREP 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 Park Electrochemical with a short position of AMREP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Park Electrochemical and AMREP.
Diversification Opportunities for Park Electrochemical and AMREP
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Park and AMREP is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Park Electrochemical and AMREP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AMREP and Park Electrochemical 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 Park Electrochemical are associated (or correlated) with AMREP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AMREP has no effect on the direction of Park Electrochemical i.e., Park Electrochemical and AMREP go up and down completely randomly.
Pair Corralation between Park Electrochemical and AMREP
Considering the 90-day investment horizon Park Electrochemical is expected to generate 3.22 times less return on investment than AMREP. But when comparing it to its historical volatility, Park Electrochemical is 2.06 times less risky than AMREP. It trades about 0.16 of its potential returns per unit of risk. AMREP is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest 2,959 in AMREP on August 26, 2024 and sell it today you would earn a total of 761.00 from holding AMREP or generate 25.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Park Electrochemical vs. AMREP
Performance |
| Timeline |
| Park Electrochemical |
| AMREP |
Park Electrochemical and AMREP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Park Electrochemical and AMREP
The main advantage of trading using opposite Park Electrochemical and AMREP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Park Electrochemical position performs unexpectedly, AMREP 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 AMREP will offset losses from the drop in AMREP's long position.| Park Electrochemical vs. Innovative Solutions and | Park Electrochemical vs. VSE Corporation | Park Electrochemical vs. Curtiss Wright | Park Electrochemical vs. Ducommun Incorporated |
| AMREP vs. Park Electrochemical | AMREP vs. Innovative Solutions and | AMREP vs. Curtiss Wright | AMREP vs. National Presto Industries |
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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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