Correlation Between AmeraMex International and FDCTech

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

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

Diversification Opportunities for AmeraMex International and FDCTech

-0.17

Correlation Coefficient

AmeraMex International  FDCTech

Good diversification

The 3 months correlation between AmeraMex and FDCTech is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding AmeraMex International and FDCTech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FDCTech and AmeraMex International 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 AmeraMex International are associated (or correlated) with FDCTech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FDCTech has no effect on the direction of AmeraMex International i.e., AmeraMex International and FDCTech go up and down completely randomly.

Pair Corralation between AmeraMex International and FDCTech

Given the investment horizon of 90 days AmeraMex International is expected to generate 274.64 times less return on investment than FDCTech. But when comparing it to its historical volatility, AmeraMex International is 33.08 times less risky than FDCTech. It trades about 0.02 of its potential returns per unit of risk. FDCTech is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  0.10  in FDCTech on December 29, 2024 and sell it today you would earn a total of  2.35  from holding FDCTech or generate 2350.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.39%
Values	Daily Returns

AmeraMex International  vs.  FDCTech

AmeraMex International

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in AmeraMex International are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong primary indicators, AmeraMex International is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

FDCTech

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in FDCTech are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak fundamental indicators, FDCTech unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with AmeraMex International and FDCTech

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

The idea behind AmeraMex International and FDCTech 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.