Correlation Between Amphastar and KeppelLimited

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

By analyzing existing cross correlation between Amphastar P and Keppel Limited, you can compare the effects of market volatilities on Amphastar and KeppelLimited 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 KeppelLimited. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amphastar and KeppelLimited.

Diversification Opportunities for Amphastar and KeppelLimited

-0.4

Correlation Coefficient

Amphastar  KeppelLimited

Very good diversification

The 3 months correlation between Amphastar and KeppelLimited is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Amphastar P and Keppel Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Keppel Limited 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 KeppelLimited. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Keppel Limited has no effect on the direction of Amphastar i.e., Amphastar and KeppelLimited go up and down completely randomly.

Pair Corralation between Amphastar and KeppelLimited

Given the investment horizon of 90 days Amphastar P is expected to under-perform the KeppelLimited. But the stock apears to be less risky and, when comparing its historical volatility, Amphastar P is 1.06 times less risky than KeppelLimited. The stock trades about -0.19 of its potential returns per unit of risk. The Keppel Limited is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  920.00  in Keppel Limited on October 23, 2024 and sell it today you would earn a total of  76.00  from holding Keppel Limited or generate 8.26% return on investment over 90 days.

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

Amphastar P  vs.  Keppel Limited

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 unsteady 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.

Keppel Limited

Risk-Adjusted Performance

4 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Keppel Limited are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak essential indicators, KeppelLimited may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Amphastar and KeppelLimited

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

The idea behind Amphastar P and Keppel Limited 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.