Correlation Between Knife River and AMPL

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

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

Diversification Opportunities for Knife River and AMPL

0.22

Correlation Coefficient

Knife River  AMPL

Modest diversification

The 3 months correlation between Knife and AMPL is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Knife River and AMPL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AMPL and Knife River 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 Knife River 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 Knife River i.e., Knife River and AMPL go up and down completely randomly.

Pair Corralation between Knife River and AMPL

Considering the 90-day investment horizon Knife River is expected to under-perform the AMPL. But the stock apears to be less risky and, when comparing its historical volatility, Knife River is 2.22 times less risky than AMPL. The stock trades about -0.06 of its potential returns per unit of risk. The AMPL is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  114.00  in AMPL on December 30, 2024 and sell it today you would lose (18.00) from holding AMPL or give up 15.79% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.38%
Values	Daily Returns

Knife River  vs.  AMPL

Knife River

Risk-Adjusted Performance

Very Weak

Over the last 90 days Knife River has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

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 Knife River and AMPL

The main advantage of trading using opposite Knife River and AMPL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Knife River 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 Knife River 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.