Correlation Between Ambari Brands and Caseys General

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

By analyzing existing cross correlation between Ambari Brands and Caseys General Stores, you can compare the effects of market volatilities on Ambari Brands and Caseys General 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 Ambari Brands with a short position of Caseys General. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ambari Brands and Caseys General.

Diversification Opportunities for Ambari Brands and Caseys General

0.16

Correlation Coefficient

Ambari Brands  Caseys General

Average diversification

The 3 months correlation between Ambari and Caseys is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Ambari Brands and Caseys General Stores in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Caseys General Stores and Ambari Brands 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 Ambari Brands are associated (or correlated) with Caseys General. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Caseys General Stores has no effect on the direction of Ambari Brands i.e., Ambari Brands and Caseys General go up and down completely randomly.

Pair Corralation between Ambari Brands and Caseys General

Assuming the 90 days horizon Ambari Brands is expected to generate 17.27 times more return on investment than Caseys General. However, Ambari Brands is 17.27 times more volatile than Caseys General Stores. It trades about 0.07 of its potential returns per unit of risk. Caseys General Stores is currently generating about 0.08 per unit of risk. If you would invest  15.00  in Ambari Brands on October 5, 2024 and sell it today you would lose (7.50) from holding Ambari Brands or give up 50.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	90.89%
Values	Daily Returns

Ambari Brands  vs.  Caseys General Stores

Ambari Brands

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ambari Brands has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable fundamental drivers, Ambari Brands is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Caseys General Stores

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Caseys General Stores are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Caseys General may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Ambari Brands and Caseys General

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

The idea behind Ambari Brands and Caseys General Stores 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.