Correlation Between Aminex PLC and Permian Resources

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

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

Diversification Opportunities for Aminex PLC and Permian Resources

0.6

Correlation Coefficient

Aminex PLC  Permian Resources

Poor diversification

The 3 months correlation between Aminex and Permian is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Aminex PLC and Permian Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Permian Resources and Aminex PLC 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 Aminex PLC are associated (or correlated) with Permian Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Permian Resources has no effect on the direction of Aminex PLC i.e., Aminex PLC and Permian Resources go up and down completely randomly.

Pair Corralation between Aminex PLC and Permian Resources

Assuming the 90 days horizon Aminex PLC is expected to generate 10.73 times more return on investment than Permian Resources. However, Aminex PLC is 10.73 times more volatile than Permian Resources. It trades about 0.09 of its potential returns per unit of risk. Permian Resources is currently generating about 0.0 per unit of risk. If you would invest  1.50  in Aminex PLC on November 30, 2024 and sell it today you would earn a total of  0.33  from holding Aminex PLC or generate 22.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	93.18%
Values	Daily Returns

Aminex PLC  vs.  Permian Resources

Aminex PLC

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Aminex PLC are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, Aminex PLC reported solid returns over the last few months and may actually be approaching a breakup point.

Permian Resources

Risk-Adjusted Performance

Very Weak

Over the last 90 days Permian Resources has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest unsteady performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Pair Trading with Aminex PLC and Permian Resources

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

The idea behind Aminex PLC and Permian Resources 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.