Correlation Between American Customer and Opus Small

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

By analyzing existing cross correlation between American Customer Satisfaction and Opus Small Cap, you can compare the effects of market volatilities on American Customer and Opus Small 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 American Customer with a short position of Opus Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Customer and Opus Small.

Diversification Opportunities for American Customer and Opus Small

0.73

Correlation Coefficient

American Customer  Opus Small

Poor diversification

The 3 months correlation between American and Opus is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding American Customer Satisfaction and Opus Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Opus Small Cap and American Customer 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 American Customer Satisfaction are associated (or correlated) with Opus Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Opus Small Cap has no effect on the direction of American Customer i.e., American Customer and Opus Small go up and down completely randomly.

Pair Corralation between American Customer and Opus Small

Given the investment horizon of 90 days American Customer Satisfaction is expected to generate 0.72 times more return on investment than Opus Small. However, American Customer Satisfaction is 1.38 times less risky than Opus Small. It trades about 0.15 of its potential returns per unit of risk. Opus Small Cap is currently generating about 0.02 per unit of risk. If you would invest  5,798  in American Customer Satisfaction on September 26, 2024 and sell it today you would earn a total of  441.30  from holding American Customer Satisfaction or generate 7.61% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.44%
Values	Daily Returns

American Customer Satisfaction  vs.  Opus Small Cap

American Customer

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in American Customer Satisfaction are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak basic indicators, American Customer may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Opus Small Cap

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Opus Small Cap are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable fundamental indicators, Opus Small is not utilizing all of its potentials. The recent stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with American Customer and Opus Small

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

The idea behind American Customer Satisfaction and Opus Small Cap 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 CEOs Directory module to screen CEOs from public companies around the world.