Correlation Between Spring Valley and Ampleforth

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

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

Diversification Opportunities for Spring Valley and Ampleforth

-0.07

Correlation Coefficient

Spring Valley  Ampleforth

Good diversification

The 3 months correlation between Spring and Ampleforth is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Spring Valley Acquisition and Ampleforth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ampleforth and Spring Valley 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 Spring Valley Acquisition are associated (or correlated) with Ampleforth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ampleforth has no effect on the direction of Spring Valley i.e., Spring Valley and Ampleforth go up and down completely randomly.

Pair Corralation between Spring Valley and Ampleforth

Given the investment horizon of 90 days Spring Valley Acquisition is expected to under-perform the Ampleforth. But the stock apears to be less risky and, when comparing its historical volatility, Spring Valley Acquisition is 14.43 times less risky than Ampleforth. The stock trades about -0.01 of its potential returns per unit of risk. The Ampleforth is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  125.00  in Ampleforth on October 9, 2024 and sell it today you would lose (2.00) from holding Ampleforth or give up 1.6% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	96.83%
Values	Daily Returns

Spring Valley Acquisition  vs.  Ampleforth

Spring Valley Acquisition

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Spring Valley Acquisition has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong forward indicators, Spring Valley is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Ampleforth

Risk-Adjusted Performance

2 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Ampleforth are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, Ampleforth exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Spring Valley and Ampleforth

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

The idea behind Spring Valley Acquisition and Ampleforth 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.