Correlation Between American Security and Powertap Hydrogen

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

By analyzing existing cross correlation between American Security Resources and Powertap Hydrogen Capital, you can compare the effects of market volatilities on American Security and Powertap Hydrogen 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 Security with a short position of Powertap Hydrogen. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Security and Powertap Hydrogen.

Diversification Opportunities for American Security and Powertap Hydrogen

1.0

Correlation Coefficient

American Security  Powertap Hydrogen

No risk reduction

The 3 months correlation between American and Powertap is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding American Security Resources and Powertap Hydrogen Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Powertap Hydrogen Capital and American Security 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 Security Resources are associated (or correlated) with Powertap Hydrogen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Powertap Hydrogen Capital has no effect on the direction of American Security i.e., American Security and Powertap Hydrogen go up and down completely randomly.

Pair Corralation between American Security and Powertap Hydrogen

If you would invest  0.01  in Powertap Hydrogen Capital on September 1, 2024 and sell it today you would earn a total of  0.00  from holding Powertap Hydrogen Capital or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	95.45%
Values	Daily Returns

American Security Resources  vs.  Powertap Hydrogen Capital

American Security

Risk-Adjusted Performance

0 of 100

Very Weak

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

Powertap Hydrogen Capital

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Powertap Hydrogen Capital has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Powertap Hydrogen is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with American Security and Powertap Hydrogen

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

The idea behind American Security Resources and Powertap Hydrogen Capital 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.