Correlation Between Amotiv and Bluestone Resources

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

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

Diversification Opportunities for Amotiv and Bluestone Resources

0.7

Correlation Coefficient

Amotiv  Bluestone Resources

Poor diversification

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

Pair Corralation between Amotiv and Bluestone Resources

Assuming the 90 days trading horizon Amotiv Limited is expected to under-perform the Bluestone Resources. But the stock apears to be less risky and, when comparing its historical volatility, Amotiv Limited is 1.73 times less risky than Bluestone Resources. The stock trades about -0.04 of its potential returns per unit of risk. The Bluestone Resources is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  30.00  in Bluestone Resources on October 4, 2024 and sell it today you would earn a total of  2.00  from holding Bluestone Resources or generate 6.67% return on investment over 90 days.

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

Amotiv Limited  vs.  Bluestone Resources

Amotiv Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Amotiv Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Amotiv is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Bluestone Resources

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bluestone Resources has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in February 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Amotiv and Bluestone Resources

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

The idea behind Amotiv Limited and Bluestone Resources 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.

Check out your portfolio center.

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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.