Correlation Between Amphastar and USCorp

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

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

Diversification Opportunities for Amphastar and USCorp

-0.51

Correlation Coefficient

Amphastar  USCorp

Excellent diversification

The 3 months correlation between Amphastar and USCorp is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Amphastar P and USCorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on USCorp 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 USCorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of USCorp has no effect on the direction of Amphastar i.e., Amphastar and USCorp go up and down completely randomly.

Pair Corralation between Amphastar and USCorp

Given the investment horizon of 90 days Amphastar is expected to generate 1.47 times less return on investment than USCorp. But when comparing it to its historical volatility, Amphastar P is 4.47 times less risky than USCorp. It trades about 0.02 of its potential returns per unit of risk. USCorp is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  0.32  in USCorp on October 8, 2024 and sell it today you would lose (0.30) from holding USCorp or give up 93.75% of portfolio value over 90 days.

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

Amphastar P  vs.  USCorp

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.

USCorp

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in USCorp are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak fundamental indicators, USCorp unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Amphastar and USCorp

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

The idea behind Amphastar P and USCorp 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.