Correlation Between American Vanguard and Humatech

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

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

Diversification Opportunities for American Vanguard and Humatech

-0.09

Correlation Coefficient

American Vanguard  Humatech

Good diversification

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

Pair Corralation between American Vanguard and Humatech

Considering the 90-day investment horizon American Vanguard is expected to under-perform the Humatech. But the stock apears to be less risky and, when comparing its historical volatility, American Vanguard is 30.58 times less risky than Humatech. The stock trades about -0.07 of its potential returns per unit of risk. The Humatech is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  0.84  in Humatech on October 10, 2024 and sell it today you would lose (0.66) from holding Humatech or give up 78.57% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.8%
Values	Daily Returns

American Vanguard  vs.  Humatech

American Vanguard

Risk-Adjusted Performance

0 of 100

Very Weak

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

Humatech

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Humatech are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively conflicting primary indicators, Humatech unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with American Vanguard and Humatech

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

The idea behind American Vanguard and Humatech 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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.