Correlation Between Ampco Pittsburgh and Tredegar

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

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

Diversification Opportunities for Ampco Pittsburgh and Tredegar

0.06

Correlation Coefficient

Ampco Pittsburgh  Tredegar

Significant diversification

The 3 months correlation between Ampco and Tredegar is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Ampco Pittsburgh and Tredegar in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tredegar and Ampco Pittsburgh 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 Ampco Pittsburgh are associated (or correlated) with Tredegar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tredegar has no effect on the direction of Ampco Pittsburgh i.e., Ampco Pittsburgh and Tredegar go up and down completely randomly.

Pair Corralation between Ampco Pittsburgh and Tredegar

Allowing for the 90-day total investment horizon Ampco Pittsburgh is expected to under-perform the Tredegar. In addition to that, Ampco Pittsburgh is 1.15 times more volatile than Tredegar. It trades about -0.01 of its total potential returns per unit of risk. Tredegar is currently generating about 0.05 per unit of volatility. If you would invest  708.00  in Tredegar on September 21, 2024 and sell it today you would earn a total of  53.00  from holding Tredegar or generate 7.49% return on investment over 90 days.

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

Ampco Pittsburgh  vs.  Tredegar

Ampco Pittsburgh

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ampco Pittsburgh has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Ampco Pittsburgh is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Tredegar

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Tredegar are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak technical and fundamental indicators, Tredegar may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Ampco Pittsburgh and Tredegar

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

The idea behind Ampco Pittsburgh and Tredegar 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.