Correlation Between AM EAGLE and Prosafe SE

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

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

Diversification Opportunities for AM EAGLE and Prosafe SE

0.4

Correlation Coefficient

AM EAGLE  Prosafe SE

Very weak diversification

The 3 months correlation between AFG and Prosafe is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding AM EAGLE OUTFITTERS and Prosafe SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prosafe SE and AM EAGLE 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 AM EAGLE OUTFITTERS are associated (or correlated) with Prosafe SE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prosafe SE has no effect on the direction of AM EAGLE i.e., AM EAGLE and Prosafe SE go up and down completely randomly.

Pair Corralation between AM EAGLE and Prosafe SE

Assuming the 90 days trading horizon AM EAGLE OUTFITTERS is expected to generate 0.33 times more return on investment than Prosafe SE. However, AM EAGLE OUTFITTERS is 2.99 times less risky than Prosafe SE. It trades about -0.05 of its potential returns per unit of risk. Prosafe SE is currently generating about -0.07 per unit of risk. If you would invest  2,230  in AM EAGLE OUTFITTERS on October 9, 2024 and sell it today you would lose (560.00) from holding AM EAGLE OUTFITTERS or give up 25.11% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	99.4%
Values	Daily Returns

AM EAGLE OUTFITTERS  vs.  Prosafe SE

AM EAGLE OUTFITTERS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AM EAGLE OUTFITTERS has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's technical and fundamental indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Prosafe SE

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Prosafe SE has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with AM EAGLE and Prosafe SE

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

The idea behind AM EAGLE OUTFITTERS and Prosafe SE 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.