Correlation Between American Premium and Ideanomics

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

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

Diversification Opportunities for American Premium and Ideanomics

-0.25

Correlation Coefficient

American Premium  Ideanomics

Very good diversification

The 3 months correlation between American and Ideanomics is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding American Premium Water and Ideanomics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ideanomics and American Premium 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 American Premium Water are associated (or correlated) with Ideanomics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ideanomics has no effect on the direction of American Premium i.e., American Premium and Ideanomics go up and down completely randomly.

Pair Corralation between American Premium and Ideanomics

Given the investment horizon of 90 days American Premium Water is expected to generate 5.85 times more return on investment than Ideanomics. However, American Premium is 5.85 times more volatile than Ideanomics. It trades about 0.24 of its potential returns per unit of risk. Ideanomics is currently generating about 0.11 per unit of risk. If you would invest  0.00  in American Premium Water on September 20, 2024 and sell it today you would earn a total of  0.01  from holding American Premium Water or generate 9.223372036854776E16% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	91.01%
Values	Daily Returns

American Premium Water  vs.  Ideanomics

American Premium Water

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in American Premium Water are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite fairly fragile basic indicators, American Premium demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Ideanomics

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Ideanomics are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady technical and fundamental indicators, Ideanomics showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with American Premium and Ideanomics

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

The idea behind American Premium Water and Ideanomics 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.