Correlation Between Amphastar and Farmers Bancorp

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

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

Diversification Opportunities for Amphastar and Farmers Bancorp

-0.82

Correlation Coefficient

Amphastar  Farmers Bancorp

Pay attention - limited upside

The 3 months correlation between Amphastar and Farmers is -0.82. Overlapping area represents the amount of risk that can be diversified away by holding Amphastar P and Farmers Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Farmers Bancorp and Amphastar 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 Amphastar P are associated (or correlated) with Farmers Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Farmers Bancorp has no effect on the direction of Amphastar i.e., Amphastar and Farmers Bancorp go up and down completely randomly.

Pair Corralation between Amphastar and Farmers Bancorp

Given the investment horizon of 90 days Amphastar P is expected to under-perform the Farmers Bancorp. In addition to that, Amphastar is 1.65 times more volatile than Farmers Bancorp. It trades about -0.06 of its total potential returns per unit of risk. Farmers Bancorp is currently generating about 0.0 per unit of volatility. If you would invest  3,735  in Farmers Bancorp on October 22, 2024 and sell it today you would lose (104.00) from holding Farmers Bancorp or give up 2.78% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	84.68%
Values	Daily Returns

Amphastar P  vs.  Farmers Bancorp

Amphastar P

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Amphastar P has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in February 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Farmers Bancorp

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Farmers Bancorp are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Even with relatively unfluctuating fundamental drivers, Farmers Bancorp may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Amphastar and Farmers Bancorp

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

The idea behind Amphastar P and Farmers Bancorp 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..