Correlation Between AmeraMex International and Porsche Automobil

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

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

Diversification Opportunities for AmeraMex International and Porsche Automobil

0.15

Correlation Coefficient

AmeraMex International  Porsche Automobil

Average diversification

The 3 months correlation between AmeraMex and Porsche is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding AmeraMex International and Porsche Automobil Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Porsche Automobil Holding 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 Porsche Automobil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Porsche Automobil Holding has no effect on the direction of AmeraMex International i.e., AmeraMex International and Porsche Automobil go up and down completely randomly.

Pair Corralation between AmeraMex International and Porsche Automobil

Given the investment horizon of 90 days AmeraMex International is expected to under-perform the Porsche Automobil. In addition to that, AmeraMex International is 3.3 times more volatile than Porsche Automobil Holding. It trades about -0.05 of its total potential returns per unit of risk. Porsche Automobil Holding is currently generating about -0.12 per unit of volatility. If you would invest  4,329  in Porsche Automobil Holding on August 30, 2024 and sell it today you would lose (809.00) from holding Porsche Automobil Holding or give up 18.69% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

AmeraMex International  vs.  Porsche Automobil Holding

AmeraMex International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AmeraMex International has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's primary indicators remain fairly strong which may send shares a bit higher in December 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Porsche Automobil Holding

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Porsche Automobil Holding has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's technical indicators remain nearly stable which may send shares a bit higher in December 2024. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with AmeraMex International and Porsche Automobil

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

The idea behind AmeraMex International and Porsche Automobil Holding 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.