Correlation Between American Vanguard and SohuCom

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

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

Diversification Opportunities for American Vanguard and SohuCom

-0.27

Correlation Coefficient

American Vanguard  SohuCom

Very good diversification

The 3 months correlation between American and SohuCom is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding American Vanguard and SohuCom in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SohuCom 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 SohuCom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SohuCom has no effect on the direction of American Vanguard i.e., American Vanguard and SohuCom go up and down completely randomly.

Pair Corralation between American Vanguard and SohuCom

Considering the 90-day investment horizon American Vanguard is expected to generate 1.18 times more return on investment than SohuCom. However, American Vanguard is 1.18 times more volatile than SohuCom. It trades about -0.05 of its potential returns per unit of risk. SohuCom is currently generating about -0.15 per unit of risk. If you would invest  520.00  in American Vanguard on October 8, 2024 and sell it today you would lose (56.00) from holding American Vanguard or give up 10.77% of portfolio value over 90 days.

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

American Vanguard  vs.  SohuCom

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 latest fragile performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

SohuCom

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SohuCom has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of conflicting performance in the last few months, the Stock's technical indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with American Vanguard and SohuCom

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

The idea behind American Vanguard and SohuCom 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.