Correlation Between Eve Holding and Ammo Preferred

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

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

Diversification Opportunities for Eve Holding and Ammo Preferred

-0.47

Correlation Coefficient

Eve Holding  Ammo Preferred

Very good diversification

The 3 months correlation between Eve and Ammo is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Eve Holding and Ammo Preferred in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ammo Preferred and Eve Holding 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 Eve Holding are associated (or correlated) with Ammo Preferred. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ammo Preferred has no effect on the direction of Eve Holding i.e., Eve Holding and Ammo Preferred go up and down completely randomly.

Pair Corralation between Eve Holding and Ammo Preferred

Given the investment horizon of 90 days Eve Holding is expected to under-perform the Ammo Preferred. In addition to that, Eve Holding is 1.56 times more volatile than Ammo Preferred. It trades about -0.12 of its total potential returns per unit of risk. Ammo Preferred is currently generating about 0.04 per unit of volatility. If you would invest  2,041  in Ammo Preferred on December 17, 2024 and sell it today you would earn a total of  100.00  from holding Ammo Preferred or generate 4.9% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.36%
Values	Daily Returns

Eve Holding  vs.  Ammo Preferred

Eve Holding

Risk-Adjusted Performance

Very Weak

Over the last 90 days Eve Holding has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's technical and fundamental 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.

Ammo Preferred

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Ammo Preferred are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Even with relatively abnormal basic indicators, Ammo Preferred may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Eve Holding and Ammo Preferred

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

The idea behind Eve Holding and Ammo Preferred 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.