Correlation Between AmTrust Financial and Asure Software

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

By analyzing existing cross correlation between AmTrust Financial Services and Asure Software, you can compare the effects of market volatilities on AmTrust Financial and Asure Software 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 AmTrust Financial with a short position of Asure Software. Check out your portfolio center. Please also check ongoing floating volatility patterns of AmTrust Financial and Asure Software.

Diversification Opportunities for AmTrust Financial and Asure Software

0.35

Correlation Coefficient

AmTrust Financial  Asure Software

Weak diversification

The 3 months correlation between AmTrust and Asure is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding AmTrust Financial Services and Asure Software in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Asure Software and AmTrust Financial 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 AmTrust Financial Services are associated (or correlated) with Asure Software. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Asure Software has no effect on the direction of AmTrust Financial i.e., AmTrust Financial and Asure Software go up and down completely randomly.

Pair Corralation between AmTrust Financial and Asure Software

Assuming the 90 days horizon AmTrust Financial Services is expected to generate 0.7 times more return on investment than Asure Software. However, AmTrust Financial Services is 1.44 times less risky than Asure Software. It trades about 0.03 of its potential returns per unit of risk. Asure Software is currently generating about 0.01 per unit of risk. If you would invest  1,362  in AmTrust Financial Services on September 24, 2024 and sell it today you would earn a total of  33.00  from holding AmTrust Financial Services or generate 2.42% return on investment over 90 days.

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

AmTrust Financial Services  vs.  Asure Software

AmTrust Financial

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in AmTrust Financial Services are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable forward indicators, AmTrust Financial is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

Asure Software

Risk-Adjusted Performance

1 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Asure Software are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Asure Software is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with AmTrust Financial and Asure Software

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

The idea behind AmTrust Financial Services and Asure Software 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.