Correlation Between Ardmore Shpng and USA Compression

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

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

Diversification Opportunities for Ardmore Shpng and USA Compression

-0.7

Correlation Coefficient

Ardmore Shpng  USA Compression

Excellent diversification

The 3 months correlation between Ardmore and USA is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Ardmore Shpng and USA Compression Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on USA Compression Partners and Ardmore Shpng 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 Ardmore Shpng are associated (or correlated) with USA Compression. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of USA Compression Partners has no effect on the direction of Ardmore Shpng i.e., Ardmore Shpng and USA Compression go up and down completely randomly.

Pair Corralation between Ardmore Shpng and USA Compression

Considering the 90-day investment horizon Ardmore Shpng is expected to under-perform the USA Compression. In addition to that, Ardmore Shpng is 1.54 times more volatile than USA Compression Partners. It trades about -0.28 of its total potential returns per unit of risk. USA Compression Partners is currently generating about 0.06 per unit of volatility. If you would invest  2,199  in USA Compression Partners on September 12, 2024 and sell it today you would earn a total of  95.00  from holding USA Compression Partners or generate 4.32% return on investment over 90 days.

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

Ardmore Shpng  vs.  USA Compression Partners

Ardmore Shpng

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ardmore Shpng has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

USA Compression Partners

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in USA Compression Partners are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, USA Compression is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Ardmore Shpng and USA Compression

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

The idea behind Ardmore Shpng and USA Compression Partners 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.