Correlation Between APro and Amogreentech

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

By analyzing existing cross correlation between APro Co and Amogreentech Co, you can compare the effects of market volatilities on APro and Amogreentech 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 APro with a short position of Amogreentech. Check out your portfolio center. Please also check ongoing floating volatility patterns of APro and Amogreentech.

Diversification Opportunities for APro and Amogreentech

0.73

Correlation Coefficient

APro  Amogreentech

Poor diversification

The 3 months correlation between APro and Amogreentech is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding APro Co and Amogreentech Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amogreentech and APro 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 APro Co are associated (or correlated) with Amogreentech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amogreentech has no effect on the direction of APro i.e., APro and Amogreentech go up and down completely randomly.

Pair Corralation between APro and Amogreentech

Assuming the 90 days trading horizon APro Co is expected to under-perform the Amogreentech. But the stock apears to be less risky and, when comparing its historical volatility, APro Co is 1.3 times less risky than Amogreentech. The stock trades about -0.24 of its potential returns per unit of risk. The Amogreentech Co is currently generating about -0.12 of returns per unit of risk over similar time horizon. If you would invest  795,000  in Amogreentech Co on September 2, 2024 and sell it today you would lose (188,000) from holding Amogreentech Co or give up 23.65% of portfolio value over 90 days.

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

APro Co  vs.  Amogreentech Co

APro

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days APro Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Amogreentech

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Amogreentech Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with APro and Amogreentech

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

The idea behind APro Co and Amogreentech Co 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.

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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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.