Correlation Between American Axle and Ispire Technology

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

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

Diversification Opportunities for American Axle and Ispire Technology

-0.13

Correlation Coefficient

American Axle  Ispire Technology

Good diversification

The 3 months correlation between American and Ispire is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding American Axle Manufacturing and Ispire Technology Common in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ispire Technology Common and American Axle 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 Axle Manufacturing are associated (or correlated) with Ispire Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ispire Technology Common has no effect on the direction of American Axle i.e., American Axle and Ispire Technology go up and down completely randomly.

Pair Corralation between American Axle and Ispire Technology

Considering the 90-day investment horizon American Axle Manufacturing is expected to under-perform the Ispire Technology. But the stock apears to be less risky and, when comparing its historical volatility, American Axle Manufacturing is 1.39 times less risky than Ispire Technology. The stock trades about -0.15 of its potential returns per unit of risk. The Ispire Technology Common is currently generating about -0.1 of returns per unit of risk over similar time horizon. If you would invest  625.00  in Ispire Technology Common on September 22, 2024 and sell it today you would lose (49.00) from holding Ispire Technology Common or give up 7.84% of portfolio value over 90 days.

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

American Axle Manufacturing  vs.  Ispire Technology Common

American Axle Manufa

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days American Axle Manufacturing has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, American Axle is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Ispire Technology Common

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ispire Technology Common has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest uncertain performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Pair Trading with American Axle and Ispire Technology

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

The idea behind American Axle Manufacturing and Ispire Technology Common 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.