Correlation Between AMPL and Eastern

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

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

Diversification Opportunities for AMPL and Eastern

0.07

Correlation Coefficient

AMPL  Eastern

Significant diversification

The 3 months correlation between AMPL and Eastern is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding AMPL and Eastern Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eastern and AMPL 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 AMPL are associated (or correlated) with Eastern. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eastern has no effect on the direction of AMPL i.e., AMPL and Eastern go up and down completely randomly.

Pair Corralation between AMPL and Eastern

Assuming the 90 days trading horizon AMPL is expected to under-perform the Eastern. In addition to that, AMPL is 2.75 times more volatile than Eastern Co. It trades about -0.01 of its total potential returns per unit of risk. Eastern Co is currently generating about 0.01 per unit of volatility. If you would invest  2,625  in Eastern Co on December 30, 2024 and sell it today you would lose (20.00) from holding Eastern Co or give up 0.76% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.38%
Values	Daily Returns

AMPL  vs.  Eastern Co

AMPL

Risk-Adjusted Performance

Very Weak

Over the last 90 days AMPL has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental indicators, AMPL is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Eastern

Risk-Adjusted Performance

Very Weak

Over the last 90 days Eastern Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent primary indicators, Eastern is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with AMPL and Eastern

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

The idea behind AMPL and Eastern Co 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.