Correlation Between Tlou Energy and Ametek

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

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

Diversification Opportunities for Tlou Energy and Ametek

-0.78

Correlation Coefficient

Tlou Energy  Ametek

Pay attention - limited upside

The 3 months correlation between Tlou and Ametek is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding Tlou Energy and Ametek Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ametek Inc and Tlou Energy 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 Tlou Energy are associated (or correlated) with Ametek. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ametek Inc has no effect on the direction of Tlou Energy i.e., Tlou Energy and Ametek go up and down completely randomly.

Pair Corralation between Tlou Energy and Ametek

Assuming the 90 days trading horizon Tlou Energy is expected to under-perform the Ametek. In addition to that, Tlou Energy is 3.37 times more volatile than Ametek Inc. It trades about -0.17 of its total potential returns per unit of risk. Ametek Inc is currently generating about 0.08 per unit of volatility. If you would invest  17,063  in Ametek Inc on September 22, 2024 and sell it today you would earn a total of  1,324  from holding Ametek Inc or generate 7.76% return on investment over 90 days.

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

Tlou Energy  vs.  Ametek Inc

Tlou Energy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Tlou Energy has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain 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.

Ametek Inc

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Ametek Inc are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Ametek may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Tlou Energy and Ametek

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

The idea behind Tlou Energy and Ametek Inc 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.