Correlation Between American Leisure and Ameriguard Security

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

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

Diversification Opportunities for American Leisure and Ameriguard Security

-0.13

Correlation Coefficient

American Leisure  Ameriguard Security

Good diversification

The 3 months correlation between American and Ameriguard is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding American Leisure Holdings and Ameriguard Security Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ameriguard Security and American Leisure 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 American Leisure Holdings are associated (or correlated) with Ameriguard Security. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ameriguard Security has no effect on the direction of American Leisure i.e., American Leisure and Ameriguard Security go up and down completely randomly.

Pair Corralation between American Leisure and Ameriguard Security

Given the investment horizon of 90 days American Leisure is expected to generate 1.12 times less return on investment than Ameriguard Security. In addition to that, American Leisure is 1.8 times more volatile than Ameriguard Security Services. It trades about 0.08 of its total potential returns per unit of risk. Ameriguard Security Services is currently generating about 0.17 per unit of volatility. If you would invest  11.00  in Ameriguard Security Services on December 28, 2024 and sell it today you would earn a total of  15.00  from holding Ameriguard Security Services or generate 136.36% return on investment over 90 days.

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

American Leisure Holdings  vs.  Ameriguard Security Services

American Leisure Holdings

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in American Leisure Holdings are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite fairly unfluctuating essential indicators, American Leisure demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Ameriguard Security

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Ameriguard Security Services are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Ameriguard Security unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with American Leisure and Ameriguard Security

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

The idea behind American Leisure Holdings and Ameriguard Security Services 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.

Check out your portfolio center.

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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.