Correlation Between Arts Way and AmeraMex International

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

By analyzing existing cross correlation between Arts Way Manufacturing Co and AmeraMex International, you can compare the effects of market volatilities on Arts Way and AmeraMex International 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 Arts Way with a short position of AmeraMex International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Arts Way and AmeraMex International.

Diversification Opportunities for Arts Way and AmeraMex International

0.0

Correlation Coefficient

Arts Way  AmeraMex International

Pay attention - limited upside

The 3 months correlation between Arts and AmeraMex is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Arts Way Manufacturing Co and AmeraMex International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AmeraMex International and Arts Way 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 Arts Way Manufacturing Co are associated (or correlated) with AmeraMex International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AmeraMex International has no effect on the direction of Arts Way i.e., Arts Way and AmeraMex International go up and down completely randomly.

Pair Corralation between Arts Way and AmeraMex International

Given the investment horizon of 90 days Arts Way Manufacturing Co is expected to generate 4.66 times more return on investment than AmeraMex International. However, Arts Way is 4.66 times more volatile than AmeraMex International. It trades about 0.04 of its potential returns per unit of risk. AmeraMex International is currently generating about 0.05 per unit of risk. If you would invest  258.00  in Arts Way Manufacturing Co on August 31, 2024 and sell it today you would lose (88.00) from holding Arts Way Manufacturing Co or give up 34.11% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	99.73%
Values	Daily Returns

Arts Way Manufacturing Co  vs.  AmeraMex International

Arts Way Manufacturing

Risk-Adjusted Performance

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Very Weak

Over the last 90 days Arts Way Manufacturing Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in December 2024. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

AmeraMex International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AmeraMex International has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's primary indicators remain fairly strong which may send shares a bit higher in December 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Arts Way and AmeraMex International

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

The idea behind Arts Way Manufacturing Co and AmeraMex International 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.