Correlation Between Safe and AMREP

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

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

Diversification Opportunities for Safe and AMREP

-0.6

Correlation Coefficient

Safe  AMREP

Excellent diversification

The 3 months correlation between Safe and AMREP is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Safe and Green and AMREP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AMREP and Safe 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 Safe and Green are associated (or correlated) with AMREP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AMREP has no effect on the direction of Safe i.e., Safe and AMREP go up and down completely randomly.

Pair Corralation between Safe and AMREP

Considering the 90-day investment horizon Safe and Green is expected to generate 10.59 times more return on investment than AMREP. However, Safe is 10.59 times more volatile than AMREP. It trades about 0.02 of its potential returns per unit of risk. AMREP is currently generating about 0.08 per unit of risk. If you would invest  13,200  in Safe and Green on October 4, 2024 and sell it today you would lose (12,947) from holding Safe and Green or give up 98.08% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	65.73%
Values	Daily Returns

Safe and Green  vs.  AMREP

Safe and Green

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Safe and Green has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in February 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

AMREP

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in AMREP are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Even with relatively unfluctuating basic indicators, AMREP may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Safe and AMREP

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

The idea behind Safe and Green and AMREP 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.

Check out your portfolio center.

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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.