Correlation Between Aftermaster and American Picture

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

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

Diversification Opportunities for Aftermaster and American Picture

-0.4

Correlation Coefficient

Aftermaster  American Picture

Very good diversification

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

Pair Corralation between Aftermaster and American Picture

Given the investment horizon of 90 days Aftermaster is expected to under-perform the American Picture. In addition to that, Aftermaster is 2.05 times more volatile than American Picture House. It trades about -0.13 of its total potential returns per unit of risk. American Picture House is currently generating about 0.04 per unit of volatility. If you would invest  25.00  in American Picture House on December 1, 2024 and sell it today you would earn a total of  1.00  from holding American Picture House or generate 4.0% return on investment over 90 days.

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

Aftermaster  vs.  American Picture House

Aftermaster

Risk-Adjusted Performance

Very Weak

Over the last 90 days Aftermaster has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

American Picture House

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in American Picture House are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Even with relatively uncertain technical indicators, American Picture reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Aftermaster and American Picture

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

The idea behind Aftermaster and American Picture House 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.