Correlation Between Par Pacific and Aemetis

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

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

Diversification Opportunities for Par Pacific and Aemetis

0.7

Correlation Coefficient

Par Pacific  Aemetis

Poor diversification

The 3 months correlation between Par and Aemetis is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Par Pacific Holdings and Aemetis in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aemetis and Par Pacific 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 Par Pacific Holdings are associated (or correlated) with Aemetis. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aemetis has no effect on the direction of Par Pacific i.e., Par Pacific and Aemetis go up and down completely randomly.

Pair Corralation between Par Pacific and Aemetis

Given the investment horizon of 90 days Par Pacific Holdings is expected to generate 0.64 times more return on investment than Aemetis. However, Par Pacific Holdings is 1.56 times less risky than Aemetis. It trades about -0.02 of its potential returns per unit of risk. Aemetis is currently generating about -0.08 per unit of risk. If you would invest  1,610  in Par Pacific Holdings on December 28, 2024 and sell it today you would lose (130.00) from holding Par Pacific Holdings or give up 8.07% of portfolio value over 90 days.

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

Par Pacific Holdings  vs.  Aemetis

Par Pacific Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days Par Pacific Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Par Pacific is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Aemetis

Risk-Adjusted Performance

Very Weak

Over the last 90 days Aemetis 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 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.

Pair Trading with Par Pacific and Aemetis

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

The idea behind Par Pacific Holdings and Aemetis 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.