Correlation Between AMREP and Ecovyst

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

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

Diversification Opportunities for AMREP and Ecovyst

0.81

Correlation Coefficient

AMREP  Ecovyst

Very poor diversification

The 3 months correlation between AMREP and Ecovyst is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding AMREP and Ecovyst in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ecovyst and AMREP 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 AMREP are associated (or correlated) with Ecovyst. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ecovyst has no effect on the direction of AMREP i.e., AMREP and Ecovyst go up and down completely randomly.

Pair Corralation between AMREP and Ecovyst

Considering the 90-day investment horizon AMREP is expected to under-perform the Ecovyst. In addition to that, AMREP is 1.4 times more volatile than Ecovyst. It trades about -0.18 of its total potential returns per unit of risk. Ecovyst is currently generating about -0.14 per unit of volatility. If you would invest  819.00  in Ecovyst on September 23, 2024 and sell it today you would lose (67.00) from holding Ecovyst or give up 8.18% of portfolio value over 90 days.

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

AMREP  vs.  Ecovyst

AMREP

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in AMREP are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady basic indicators, AMREP may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Ecovyst

Risk-Adjusted Performance

7 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Ecovyst are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Ecovyst unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with AMREP and Ecovyst

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

The idea behind AMREP and Ecovyst 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.