Correlation Between Amulaire Thermal and General Plastic

Can any of the company-specific risk be diversified away by investing in both Amulaire Thermal and General Plastic 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 Amulaire Thermal and General Plastic into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Amulaire Thermal Technology and General Plastic Industrial, you can compare the effects of market volatilities on Amulaire Thermal and General Plastic 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 Amulaire Thermal with a short position of General Plastic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amulaire Thermal and General Plastic.

Diversification Opportunities for Amulaire Thermal and General Plastic

0.81

Correlation Coefficient

Amulaire Thermal  General Plastic

Very poor diversification

The 3 months correlation between Amulaire and General is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Amulaire Thermal Technology and General Plastic Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on General Plastic Indu and Amulaire Thermal 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 Amulaire Thermal Technology are associated (or correlated) with General Plastic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of General Plastic Indu has no effect on the direction of Amulaire Thermal i.e., Amulaire Thermal and General Plastic go up and down completely randomly.

Pair Corralation between Amulaire Thermal and General Plastic

Assuming the 90 days trading horizon Amulaire Thermal is expected to generate 3.15 times less return on investment than General Plastic. In addition to that, Amulaire Thermal is 2.1 times more volatile than General Plastic Industrial. It trades about 0.06 of its total potential returns per unit of risk. General Plastic Industrial is currently generating about 0.38 per unit of volatility. If you would invest  3,385  in General Plastic Industrial on December 5, 2024 and sell it today you would earn a total of  215.00  from holding General Plastic Industrial or generate 6.35% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	100.0%
Values	Daily Returns

Amulaire Thermal Technology  vs.  General Plastic Industrial

Amulaire Thermal Tec

Risk-Adjusted Performance

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Amulaire Thermal Technology are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Amulaire Thermal is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

General Plastic Indu

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in General Plastic Industrial are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, General Plastic is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Amulaire Thermal and General Plastic

The main advantage of trading using opposite Amulaire Thermal and General Plastic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amulaire Thermal position performs unexpectedly, General Plastic 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 General Plastic will offset losses from the drop in General Plastic's long position.

The idea behind Amulaire Thermal Technology and General Plastic Industrial 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.

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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.