Correlation Between AMREP and Five Point

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

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

Diversification Opportunities for AMREP and Five Point

-0.4

Correlation Coefficient

AMREP  Five Point

Very good diversification

The 3 months correlation between AMREP and Five is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding AMREP and Five Point Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Five Point Holdings 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 Five Point. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Five Point Holdings has no effect on the direction of AMREP i.e., AMREP and Five Point go up and down completely randomly.

Pair Corralation between AMREP and Five Point

Considering the 90-day investment horizon AMREP is expected to under-perform the Five Point. But the stock apears to be less risky and, when comparing its historical volatility, AMREP is 1.77 times less risky than Five Point. The stock trades about -0.19 of its potential returns per unit of risk. The Five Point Holdings is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  358.00  in Five Point Holdings on December 27, 2024 and sell it today you would earn a total of  175.00  from holding Five Point Holdings or generate 48.88% return on investment over 90 days.

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

AMREP  vs.  Five Point Holdings

AMREP

Risk-Adjusted Performance

Very Weak

Over the last 90 days AMREP has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in April 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Five Point Holdings

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Five Point Holdings are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak basic indicators, Five Point demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with AMREP and Five Point

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

The idea behind AMREP and Five Point Holdings 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.