Correlation Between ESAB Corp and AMREP

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

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

Diversification Opportunities for ESAB Corp and AMREP

0.3

Correlation Coefficient

ESAB Corp  AMREP

Weak diversification

The 3 months correlation between ESAB and AMREP is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding ESAB Corp and AMREP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AMREP and ESAB Corp 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 ESAB Corp are associated (or correlated) with AMREP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AMREP has no effect on the direction of ESAB Corp i.e., ESAB Corp and AMREP go up and down completely randomly.

Pair Corralation between ESAB Corp and AMREP

Given the investment horizon of 90 days ESAB Corp is expected to generate 0.5 times more return on investment than AMREP. However, ESAB Corp is 1.98 times less risky than AMREP. It trades about 0.11 of its potential returns per unit of risk. AMREP is currently generating about 0.01 per unit of risk. If you would invest  12,253  in ESAB Corp on May 3, 2025 and sell it today you would earn a total of  1,164  from holding ESAB Corp or generate 9.5% return on investment over 90 days.

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

ESAB Corp  vs.  AMREP

ESAB Corp

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in ESAB Corp are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating basic indicators, ESAB Corp may actually be approaching a critical reversion point that can send shares even higher in September 2025.

AMREP

Risk-Adjusted Performance

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in AMREP are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, AMREP is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with ESAB Corp and AMREP

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

The idea behind ESAB Corp and AMREP 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.