Correlation Between Amphastar and Starfleet Innotech

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

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

Diversification Opportunities for Amphastar and Starfleet Innotech

-0.7

Correlation Coefficient

Amphastar  Starfleet Innotech

Excellent diversification

The 3 months correlation between Amphastar and Starfleet is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Amphastar P and Starfleet Innotech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Starfleet Innotech 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 Starfleet Innotech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Starfleet Innotech has no effect on the direction of Amphastar i.e., Amphastar and Starfleet Innotech go up and down completely randomly.

Pair Corralation between Amphastar and Starfleet Innotech

Given the investment horizon of 90 days Amphastar P is expected to under-perform the Starfleet Innotech. But the stock apears to be less risky and, when comparing its historical volatility, Amphastar P is 12.94 times less risky than Starfleet Innotech. The stock trades about -0.17 of its potential returns per unit of risk. The Starfleet Innotech is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  0.31  in Starfleet Innotech on September 15, 2024 and sell it today you would earn a total of  0.14  from holding Starfleet Innotech or generate 45.16% return on investment over 90 days.

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

Amphastar P  vs.  Starfleet Innotech

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 latest conflicting performance, the Stock's basic indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Starfleet Innotech

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Starfleet Innotech are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very inconsistent forward indicators, Starfleet Innotech displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Amphastar and Starfleet Innotech

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

The idea behind Amphastar P and Starfleet Innotech 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.