Correlation Between Amanet Management and Norstar

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

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

Diversification Opportunities for Amanet Management and Norstar

0.7

Correlation Coefficient

Amanet Management  Norstar

Poor diversification

The 3 months correlation between Amanet and Norstar is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Amanet Management Systems and Norstar in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Norstar and Amanet Management 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 Amanet Management Systems are associated (or correlated) with Norstar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Norstar has no effect on the direction of Amanet Management i.e., Amanet Management and Norstar go up and down completely randomly.

Pair Corralation between Amanet Management and Norstar

Assuming the 90 days trading horizon Amanet Management is expected to generate 11.02 times less return on investment than Norstar. But when comparing it to its historical volatility, Amanet Management Systems is 1.89 times less risky than Norstar. It trades about 0.05 of its potential returns per unit of risk. Norstar is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest  112,400  in Norstar on September 12, 2024 and sell it today you would earn a total of  45,800  from holding Norstar or generate 40.75% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	97.83%
Values	Daily Returns

Amanet Management Systems  vs.  Norstar

Amanet Management Systems

Risk-Adjusted Performance

3 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Amanet Management Systems are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Amanet Management is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Norstar

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Norstar are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, Norstar sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Amanet Management and Norstar

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

The idea behind Amanet Management Systems and Norstar 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.