Correlation Between Barloworld and AMPL

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

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

Diversification Opportunities for Barloworld and AMPL

-0.2

Correlation Coefficient

Barloworld  AMPL

Good diversification

The 3 months correlation between Barloworld and AMPL is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Barloworld Ltd ADR and AMPL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AMPL and Barloworld 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 Barloworld Ltd ADR are associated (or correlated) with AMPL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AMPL has no effect on the direction of Barloworld i.e., Barloworld and AMPL go up and down completely randomly.

Pair Corralation between Barloworld and AMPL

Assuming the 90 days horizon Barloworld Ltd ADR is expected to under-perform the AMPL. But the pink sheet apears to be less risky and, when comparing its historical volatility, Barloworld Ltd ADR is 1.55 times less risky than AMPL. The pink sheet trades about -0.04 of its potential returns per unit of risk. The AMPL is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  134.00  in AMPL on December 2, 2024 and sell it today you would lose (19.00) from holding AMPL or give up 14.18% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	69.23%
Values	Daily Returns

Barloworld Ltd ADR  vs.  AMPL

Barloworld ADR

Risk-Adjusted Performance

Very Weak

Over the last 90 days Barloworld Ltd ADR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

AMPL

Risk-Adjusted Performance

Very Weak

Over the last 90 days AMPL has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental indicators, AMPL is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Barloworld and AMPL

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

The idea behind Barloworld Ltd ADR and AMPL 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 Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.