Correlation Between ANT and 00108WAH3

Can any of the company-specific risk be diversified away by investing in both ANT and 00108WAH3 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 ANT and 00108WAH3 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between ANT and AEP TEX INC, you can compare the effects of market volatilities on ANT and 00108WAH3 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 ANT with a short position of 00108WAH3. Check out your portfolio center. Please also check ongoing floating volatility patterns of ANT and 00108WAH3.

Diversification Opportunities for ANT and 00108WAH3

-0.09

Correlation Coefficient

ANT  00108WAH3

Good diversification

The 3 months correlation between ANT and 00108WAH3 is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding ANT and AEP TEX INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AEP TEX INC and ANT 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 ANT are associated (or correlated) with 00108WAH3. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AEP TEX INC has no effect on the direction of ANT i.e., ANT and 00108WAH3 go up and down completely randomly.

Pair Corralation between ANT and 00108WAH3

Assuming the 90 days trading horizon ANT is expected to generate 26.66 times more return on investment than 00108WAH3. However, ANT is 26.66 times more volatile than AEP TEX INC. It trades about 0.07 of its potential returns per unit of risk. AEP TEX INC is currently generating about -0.12 per unit of risk. If you would invest  147.00  in ANT on December 24, 2024 and sell it today you would lose (12.00) from holding ANT or give up 8.16% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	79.69%
Values	Daily Returns

ANT  vs.  AEP TEX INC

ANT

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in ANT are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, ANT exhibited solid returns over the last few months and may actually be approaching a breakup point.

AEP TEX INC

Risk-Adjusted Performance

Very Weak

Over the last 90 days AEP TEX INC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 00108WAH3 is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with ANT and 00108WAH3

The main advantage of trading using opposite ANT and 00108WAH3 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ANT position performs unexpectedly, 00108WAH3 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 00108WAH3 will offset losses from the drop in 00108WAH3's long position.

The idea behind ANT and AEP TEX INC 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.