Correlation Between De Licacy and Ampire

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

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

Diversification Opportunities for De Licacy and Ampire

-0.47

Correlation Coefficient

De Licacy  Ampire

Very good diversification

The 3 months correlation between 1464 and Ampire is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding De Licacy Industrial and Ampire Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ampire and De Licacy 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 De Licacy Industrial are associated (or correlated) with Ampire. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ampire has no effect on the direction of De Licacy i.e., De Licacy and Ampire go up and down completely randomly.

Pair Corralation between De Licacy and Ampire

Assuming the 90 days trading horizon De Licacy Industrial is expected to generate 3.9 times more return on investment than Ampire. However, De Licacy is 3.9 times more volatile than Ampire Co. It trades about 0.11 of its potential returns per unit of risk. Ampire Co is currently generating about -0.16 per unit of risk. If you would invest  1,400  in De Licacy Industrial on September 26, 2024 and sell it today you would earn a total of  235.00  from holding De Licacy Industrial or generate 16.79% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.44%
Values	Daily Returns

De Licacy Industrial  vs.  Ampire Co

De Licacy Industrial

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in De Licacy Industrial are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, De Licacy showed solid returns over the last few months and may actually be approaching a breakup point.

Ampire

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ampire Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Pair Trading with De Licacy and Ampire

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

The idea behind De Licacy Industrial and Ampire Co 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.