Correlation Between Ama Marine and Harn Engineering

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

By analyzing existing cross correlation between Ama Marine Public and Harn Engineering Solutions, you can compare the effects of market volatilities on Ama Marine and Harn Engineering 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 Ama Marine with a short position of Harn Engineering. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ama Marine and Harn Engineering.

Diversification Opportunities for Ama Marine and Harn Engineering

0.35

Correlation Coefficient

Ama Marine  Harn Engineering

Weak diversification

The 3 months correlation between Ama and Harn is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Ama Marine Public and Harn Engineering Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Harn Engineering Sol and Ama Marine 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 Ama Marine Public are associated (or correlated) with Harn Engineering. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Harn Engineering Sol has no effect on the direction of Ama Marine i.e., Ama Marine and Harn Engineering go up and down completely randomly.

Pair Corralation between Ama Marine and Harn Engineering

Assuming the 90 days trading horizon Ama Marine Public is expected to under-perform the Harn Engineering. In addition to that, Ama Marine is 1.17 times more volatile than Harn Engineering Solutions. It trades about -0.13 of its total potential returns per unit of risk. Harn Engineering Solutions is currently generating about 0.02 per unit of volatility. If you would invest  210.00  in Harn Engineering Solutions on September 18, 2024 and sell it today you would earn a total of  2.00  from holding Harn Engineering Solutions or generate 0.95% return on investment over 90 days.

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

Ama Marine Public  vs.  Harn Engineering Solutions

Ama Marine Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ama Marine Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Harn Engineering Sol

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Harn Engineering Solutions are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent forward-looking signals, Harn Engineering is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Ama Marine and Harn Engineering

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

The idea behind Ama Marine Public and Harn Engineering Solutions 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 Global Correlations module to find global opportunities by holding instruments from different markets.