Correlation Between Ampco Pittsburgh and Allegheny Technologies

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

By analyzing existing cross correlation between Ampco Pittsburgh and Allegheny Technologies Incorporated, you can compare the effects of market volatilities on Ampco Pittsburgh and Allegheny Technologies 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 Ampco Pittsburgh with a short position of Allegheny Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ampco Pittsburgh and Allegheny Technologies.

Diversification Opportunities for Ampco Pittsburgh and Allegheny Technologies

-0.53

Correlation Coefficient

Ampco Pittsburgh  Allegheny Technologies

Excellent diversification

The 3 months correlation between Ampco and Allegheny is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Ampco Pittsburgh and Allegheny Technologies Incorpo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Allegheny Technologies and Ampco Pittsburgh 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 Ampco Pittsburgh are associated (or correlated) with Allegheny Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Allegheny Technologies has no effect on the direction of Ampco Pittsburgh i.e., Ampco Pittsburgh and Allegheny Technologies go up and down completely randomly.

Pair Corralation between Ampco Pittsburgh and Allegheny Technologies

Allowing for the 90-day total investment horizon Ampco Pittsburgh is expected to under-perform the Allegheny Technologies. In addition to that, Ampco Pittsburgh is 1.45 times more volatile than Allegheny Technologies Incorporated. It trades about -0.06 of its total potential returns per unit of risk. Allegheny Technologies Incorporated is currently generating about 0.05 per unit of volatility. If you would invest  5,101  in Allegheny Technologies Incorporated on January 29, 2024 and sell it today you would earn a total of  74.00  from holding Allegheny Technologies Incorporated or generate 1.45% return on investment over 90 days.

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

Ampco Pittsburgh  vs.  Allegheny Technologies Incorpo

Ampco Pittsburgh

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ampco Pittsburgh has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in May 2024. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Allegheny Technologies

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Allegheny Technologies Incorporated are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite fairly unfluctuating basic indicators, Allegheny Technologies demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ampco Pittsburgh and Allegheny Technologies

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

The idea behind Ampco Pittsburgh and Allegheny Technologies Incorporated 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.