Correlation Between Acme United and Perma Fix

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

By analyzing existing cross correlation between Acme United and Perma Fix Environmental Svcs, you can compare the effects of market volatilities on Acme United and Perma Fix 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 Acme United with a short position of Perma Fix. Check out your portfolio center. Please also check ongoing floating volatility patterns of Acme United and Perma Fix.

Diversification Opportunities for Acme United and Perma Fix

-0.68

Correlation Coefficient

Acme United  Perma Fix

Excellent diversification

The 3 months correlation between Acme and Perma is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Acme United and Perma Fix Environmental Svcs in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Perma Fix Environmental and Acme United 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 Acme United are associated (or correlated) with Perma Fix. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Perma Fix Environmental has no effect on the direction of Acme United i.e., Acme United and Perma Fix go up and down completely randomly.

Pair Corralation between Acme United and Perma Fix

Considering the 90-day investment horizon Acme United is expected to generate 0.68 times more return on investment than Perma Fix. However, Acme United is 1.47 times less risky than Perma Fix. It trades about 0.11 of its potential returns per unit of risk. Perma Fix Environmental Svcs is currently generating about -0.17 per unit of risk. If you would invest  3,653  in Acme United on December 27, 2024 and sell it today you would earn a total of  442.00  from holding Acme United or generate 12.1% return on investment over 90 days.

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

Acme United  vs.  Perma Fix Environmental Svcs

Acme United

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Acme United are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively abnormal fundamental indicators, Acme United unveiled solid returns over the last few months and may actually be approaching a breakup point.

Perma Fix Environmental

Risk-Adjusted Performance

Very Weak

Over the last 90 days Perma Fix Environmental Svcs 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 fairly strong which may send shares a bit higher in April 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with Acme United and Perma Fix

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

The idea behind Acme United and Perma Fix Environmental Svcs 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.