Correlation Between Sapiens International and AMREP

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

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

Diversification Opportunities for Sapiens International and AMREP

-0.84

Correlation Coefficient

Sapiens International  AMREP

Pay attention - limited upside

The 3 months correlation between Sapiens and AMREP is -0.84. Overlapping area represents the amount of risk that can be diversified away by holding Sapiens International and AMREP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AMREP and Sapiens International 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 Sapiens International 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 Sapiens International i.e., Sapiens International and AMREP go up and down completely randomly.

Pair Corralation between Sapiens International and AMREP

Given the investment horizon of 90 days Sapiens International is expected to generate 4.61 times less return on investment than AMREP. But when comparing it to its historical volatility, Sapiens International is 1.46 times less risky than AMREP. It trades about 0.03 of its potential returns per unit of risk. AMREP is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  1,670  in AMREP on September 21, 2024 and sell it today you would earn a total of  1,459  from holding AMREP or generate 87.37% return on investment over 90 days.

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

Sapiens International  vs.  AMREP

Sapiens International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sapiens International has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

AMREP

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in AMREP are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, AMREP is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Sapiens International and AMREP

The main advantage of trading using opposite Sapiens International and AMREP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sapiens International 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 Sapiens International 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.

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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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.