Correlation Between Silver Spike and Amphastar

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

By analyzing existing cross correlation between Silver Spike Investment and Amphastar P, you can compare the effects of market volatilities on Silver Spike and Amphastar 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 Silver Spike with a short position of Amphastar. Check out your portfolio center. Please also check ongoing floating volatility patterns of Silver Spike and Amphastar.

Diversification Opportunities for Silver Spike and Amphastar

-0.08

Correlation Coefficient

Silver Spike  Amphastar

Good diversification

The 3 months correlation between Silver and Amphastar is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Silver Spike Investment and Amphastar P in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amphastar P and Silver Spike 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 Silver Spike Investment are associated (or correlated) with Amphastar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amphastar P has no effect on the direction of Silver Spike i.e., Silver Spike and Amphastar go up and down completely randomly.

Pair Corralation between Silver Spike and Amphastar

Given the investment horizon of 90 days Silver Spike Investment is expected to generate 0.98 times more return on investment than Amphastar. However, Silver Spike Investment is 1.02 times less risky than Amphastar. It trades about -0.01 of its potential returns per unit of risk. Amphastar P is currently generating about -0.07 per unit of risk. If you would invest  1,284  in Silver Spike Investment on September 14, 2024 and sell it today you would lose (4.00) from holding Silver Spike Investment or give up 0.31% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	61.9%
Values	Daily Returns

Silver Spike Investment  vs.  Amphastar P

Silver Spike Investment

Risk-Adjusted Performance

0 of 100

OK

Over the last 90 days Silver Spike Investment has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather fragile forward indicators, Silver Spike exhibited solid returns over the last few months and may actually be approaching a breakup point.

Amphastar P

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Amphastar P has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's basic indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Pair Trading with Silver Spike and Amphastar

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

The idea behind Silver Spike Investment and Amphastar P 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.