Correlation Between Pioneer Power and Aemetis

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

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

Diversification Opportunities for Pioneer Power and Aemetis

0.62

Correlation Coefficient

Pioneer Power  Aemetis

Poor diversification

The 3 months correlation between Pioneer and Aemetis is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Pioneer Power Solutions and Aemetis in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aemetis and Pioneer Power 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 Pioneer Power Solutions are associated (or correlated) with Aemetis. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aemetis has no effect on the direction of Pioneer Power i.e., Pioneer Power and Aemetis go up and down completely randomly.

Pair Corralation between Pioneer Power and Aemetis

Given the investment horizon of 90 days Pioneer Power Solutions is expected to generate 0.75 times more return on investment than Aemetis. However, Pioneer Power Solutions is 1.32 times less risky than Aemetis. It trades about -0.09 of its potential returns per unit of risk. Aemetis is currently generating about -0.32 per unit of risk. If you would invest  615.00  in Pioneer Power Solutions on September 16, 2024 and sell it today you would lose (34.00) from holding Pioneer Power Solutions or give up 5.53% of portfolio value over 90 days.

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

Pioneer Power Solutions  vs.  Aemetis

Pioneer Power Solutions

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Pioneer Power Solutions are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite fairly uncertain basic indicators, Pioneer Power demonstrated solid returns over the last few months and may actually be approaching a breakup point.

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 fragile basic indicators, Aemetis showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Pioneer Power and Aemetis

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

The idea behind Pioneer Power Solutions and Aemetis 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.