Correlation Between AmeraMex International and Close Brothers

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

By analyzing existing cross correlation between AmeraMex International and Close Brothers Group, you can compare the effects of market volatilities on AmeraMex International and Close Brothers 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 AmeraMex International with a short position of Close Brothers. Check out your portfolio center. Please also check ongoing floating volatility patterns of AmeraMex International and Close Brothers.

Diversification Opportunities for AmeraMex International and Close Brothers

0.28

Correlation Coefficient

AmeraMex International  Close Brothers

Modest diversification

The 3 months correlation between AmeraMex and Close is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding AmeraMex International and Close Brothers Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Close Brothers Group and AmeraMex International 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 AmeraMex International are associated (or correlated) with Close Brothers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Close Brothers Group has no effect on the direction of AmeraMex International i.e., AmeraMex International and Close Brothers go up and down completely randomly.

Pair Corralation between AmeraMex International and Close Brothers

Given the investment horizon of 90 days AmeraMex International is expected to under-perform the Close Brothers. In addition to that, AmeraMex International is 2.87 times more volatile than Close Brothers Group. It trades about -0.11 of its total potential returns per unit of risk. Close Brothers Group is currently generating about 0.11 per unit of volatility. If you would invest  540.00  in Close Brothers Group on September 12, 2024 and sell it today you would earn a total of  49.00  from holding Close Brothers Group or generate 9.07% return on investment over 90 days.

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

AmeraMex International  vs.  Close Brothers Group

AmeraMex International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AmeraMex International has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's primary indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Close Brothers Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Close Brothers Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with AmeraMex International and Close Brothers

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

The idea behind AmeraMex International and Close Brothers Group 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.