Correlation Between AMREP and First Phosphate

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

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

Diversification Opportunities for AMREP and First Phosphate

0.58

Correlation Coefficient

AMREP  First Phosphate

Very weak diversification

The 3 months correlation between AMREP and First is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding AMREP and First Phosphate Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Phosphate Corp and AMREP 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 AMREP are associated (or correlated) with First Phosphate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Phosphate Corp has no effect on the direction of AMREP i.e., AMREP and First Phosphate go up and down completely randomly.

Pair Corralation between AMREP and First Phosphate

Considering the 90-day investment horizon AMREP is expected to generate 1.11 times more return on investment than First Phosphate. However, AMREP is 1.11 times more volatile than First Phosphate Corp. It trades about 0.13 of its potential returns per unit of risk. First Phosphate Corp is currently generating about 0.1 per unit of risk. If you would invest  3,330  in AMREP on September 15, 2024 and sell it today you would earn a total of  312.00  from holding AMREP or generate 9.37% return on investment over 90 days.

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

AMREP  vs.  First Phosphate Corp

AMREP

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in AMREP are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, AMREP reported solid returns over the last few months and may actually be approaching a breakup point.

First Phosphate Corp

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in First Phosphate Corp are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, First Phosphate reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with AMREP and First Phosphate

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

The idea behind AMREP and First Phosphate 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.