Correlation Between Exponent and AMREP

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

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

Diversification Opportunities for Exponent and AMREP

-0.54

Correlation Coefficient

Exponent  AMREP

Excellent diversification

The 3 months correlation between Exponent and AMREP is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Exponent and AMREP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AMREP and Exponent 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 Exponent are associated (or correlated) with AMREP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AMREP has no effect on the direction of Exponent i.e., Exponent and AMREP go up and down completely randomly.

Pair Corralation between Exponent and AMREP

Given the investment horizon of 90 days Exponent is expected to generate 0.27 times more return on investment than AMREP. However, Exponent is 3.69 times less risky than AMREP. It trades about -0.42 of its potential returns per unit of risk. AMREP is currently generating about -0.18 per unit of risk. If you would invest  9,842  in Exponent on September 30, 2024 and sell it today you would lose (899.00) from holding Exponent or give up 9.13% of portfolio value over 90 days.

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

Exponent  vs.  AMREP

Exponent

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Exponent has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

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.

Pair Trading with Exponent and AMREP

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

The idea behind Exponent and AMREP 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.

Check out your portfolio center.

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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.