Correlation Between Alkyl Amines and REX American

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

By analyzing existing cross correlation between Alkyl Amines Chemicals and REX American Resources, you can compare the effects of market volatilities on Alkyl Amines and REX American 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 Alkyl Amines with a short position of REX American. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alkyl Amines and REX American.

Diversification Opportunities for Alkyl Amines and REX American

-0.64

Correlation Coefficient

Alkyl Amines  REX American

Excellent diversification

The 3 months correlation between Alkyl and REX is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Alkyl Amines Chemicals and REX American Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on REX American Resources and Alkyl Amines 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 Alkyl Amines Chemicals are associated (or correlated) with REX American. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of REX American Resources has no effect on the direction of Alkyl Amines i.e., Alkyl Amines and REX American go up and down completely randomly.

Pair Corralation between Alkyl Amines and REX American

Assuming the 90 days trading horizon Alkyl Amines Chemicals is expected to under-perform the REX American. But the stock apears to be less risky and, when comparing its historical volatility, Alkyl Amines Chemicals is 1.17 times less risky than REX American. The stock trades about -0.16 of its potential returns per unit of risk. The REX American Resources is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest  5,800  in REX American Resources on February 4, 2024 and sell it today you would lose (87.00) from holding REX American Resources or give up 1.5% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	86.36%
Values	Daily Returns

Alkyl Amines Chemicals  vs.  REX American Resources

Alkyl Amines Chemicals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Alkyl Amines Chemicals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's essential indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

REX American Resources

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in REX American Resources are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak technical and fundamental indicators, REX American showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Alkyl Amines and REX American

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

The idea behind Alkyl Amines Chemicals and REX American Resources 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.