Correlation Between American Environmental and Manaris Corp

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

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

Diversification Opportunities for American Environmental and Manaris Corp

1.0

Correlation Coefficient

American Environmental  Manaris Corp

No risk reduction

The 3 months correlation between American and Manaris is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding American Environmental and Manaris Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Manaris Corp and American Environmental 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 Environmental are associated (or correlated) with Manaris Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Manaris Corp has no effect on the direction of American Environmental i.e., American Environmental and Manaris Corp go up and down completely randomly.

Pair Corralation between American Environmental and Manaris Corp

If you would invest  0.01  in Manaris Corp on December 21, 2024 and sell it today you would lose  0.00  from holding Manaris Corp or give up 0.0% of portfolio value over 90 days.

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

American Environmental  vs.  Manaris Corp

American Environmental

Risk-Adjusted Performance

Very Weak

Over the last 90 days American Environmental has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, American Environmental is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Manaris Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Manaris Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Manaris Corp is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with American Environmental and Manaris Corp

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

The idea behind American Environmental and Manaris Corp 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 Valuation module to check real value of public entities based on technical and fundamental data.