Correlation Between Aemetis and GrowGeneration Corp

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

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

Diversification Opportunities for Aemetis and GrowGeneration Corp

-0.63

Correlation Coefficient

Aemetis  GrowGeneration Corp

Excellent diversification

The 3 months correlation between Aemetis and GrowGeneration is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Aemetis and GrowGeneration Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GrowGeneration Corp and Aemetis 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 Aemetis are associated (or correlated) with GrowGeneration Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GrowGeneration Corp has no effect on the direction of Aemetis i.e., Aemetis and GrowGeneration Corp go up and down completely randomly.

Pair Corralation between Aemetis and GrowGeneration Corp

Given the investment horizon of 90 days Aemetis is expected to generate 1.6 times more return on investment than GrowGeneration Corp. However, Aemetis is 1.6 times more volatile than GrowGeneration Corp. It trades about 0.1 of its potential returns per unit of risk. GrowGeneration Corp is currently generating about -0.03 per unit of risk. If you would invest  233.00  in Aemetis on September 14, 2024 and sell it today you would earn a total of  75.00  from holding Aemetis or generate 32.19% return on investment over 90 days.

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

Aemetis  vs.  GrowGeneration Corp

Aemetis

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Aemetis are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly conflicting basic indicators, Aemetis showed solid returns over the last few months and may actually be approaching a breakup point.

GrowGeneration Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GrowGeneration Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unfluctuating performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Aemetis and GrowGeneration Corp

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

The idea behind Aemetis and GrowGeneration Corp 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.