Correlation Between AMREP and Solventum Corp

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

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

Diversification Opportunities for AMREP and Solventum Corp

-0.57

Correlation Coefficient

AMREP  Solventum Corp

Excellent diversification

The 3 months correlation between AMREP and Solventum is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding AMREP and Solventum Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Solventum Corp 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 Solventum Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Solventum Corp has no effect on the direction of AMREP i.e., AMREP and Solventum Corp go up and down completely randomly.

Pair Corralation between AMREP and Solventum Corp

Considering the 90-day investment horizon AMREP is expected to generate 1.48 times more return on investment than Solventum Corp. However, AMREP is 1.48 times more volatile than Solventum Corp. It trades about 0.06 of its potential returns per unit of risk. Solventum Corp is currently generating about 0.01 per unit of risk. If you would invest  1,194  in AMREP on December 4, 2024 and sell it today you would earn a total of  1,052  from holding AMREP or generate 88.11% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	47.57%
Values	Daily Returns

AMREP  vs.  Solventum Corp

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.

Solventum Corp

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Solventum Corp are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly inconsistent essential indicators, Solventum Corp showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with AMREP and Solventum Corp

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

The idea behind AMREP and Solventum Corp 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 Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.