Correlation Between CHEMICAL INDUSTRIES and AM EAGLE

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

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

Diversification Opportunities for CHEMICAL INDUSTRIES and AM EAGLE

0.0

Correlation Coefficient

CHEMICAL INDUSTRIES  AM EAGLE

Pay attention - limited upside

The 3 months correlation between CHEMICAL and AFG is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding CHEMICAL INDUSTRIES and AM EAGLE OUTFITTERS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AM EAGLE OUTFITTERS and CHEMICAL INDUSTRIES 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 CHEMICAL INDUSTRIES are associated (or correlated) with AM EAGLE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AM EAGLE OUTFITTERS has no effect on the direction of CHEMICAL INDUSTRIES i.e., CHEMICAL INDUSTRIES and AM EAGLE go up and down completely randomly.

Pair Corralation between CHEMICAL INDUSTRIES and AM EAGLE

Assuming the 90 days trading horizon CHEMICAL INDUSTRIES is expected to generate 5.56 times less return on investment than AM EAGLE. But when comparing it to its historical volatility, CHEMICAL INDUSTRIES is 11.44 times less risky than AM EAGLE. It trades about 0.06 of its potential returns per unit of risk. AM EAGLE OUTFITTERS is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  1,352  in AM EAGLE OUTFITTERS on October 9, 2024 and sell it today you would earn a total of  318.00  from holding AM EAGLE OUTFITTERS or generate 23.52% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

CHEMICAL INDUSTRIES  vs.  AM EAGLE OUTFITTERS

CHEMICAL INDUSTRIES

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CHEMICAL INDUSTRIES has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound primary indicators, CHEMICAL INDUSTRIES is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

AM EAGLE OUTFITTERS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AM EAGLE OUTFITTERS has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's technical and fundamental indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with CHEMICAL INDUSTRIES and AM EAGLE

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

The idea behind CHEMICAL INDUSTRIES and AM EAGLE OUTFITTERS 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.