Correlation Between Paiute Oil and Ameritrans Capital

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

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

Diversification Opportunities for Paiute Oil and Ameritrans Capital

1.0

Correlation Coefficient

Paiute Oil  Ameritrans Capital

No risk reduction

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

Pair Corralation between Paiute Oil and Ameritrans Capital

If you would invest  15.00  in Ameritrans Capital Corp on September 13, 2024 and sell it today you would earn a total of  0.00  from holding Ameritrans Capital Corp or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	96.88%
Values	Daily Returns

Paiute Oil Mining  vs.  Ameritrans Capital Corp

Paiute Oil Mining

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Paiute Oil Mining has generated negative risk-adjusted returns adding no value to investors with long positions. Even with uncertain performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Ameritrans Capital Corp

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Paiute Oil and Ameritrans Capital

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

The idea behind Paiute Oil Mining and Ameritrans Capital 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.