Correlation Between Safe T and Amos Luzon

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

By analyzing existing cross correlation between Safe T Group and Amos Luzon Development, you can compare the effects of market volatilities on Safe T and Amos Luzon 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 Safe T with a short position of Amos Luzon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Safe T and Amos Luzon.

Diversification Opportunities for Safe T and Amos Luzon

0.67

Correlation Coefficient

Safe T  Amos Luzon

Poor diversification

The 3 months correlation between Safe and Amos is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Safe T Group and Amos Luzon Development in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amos Luzon Development and Safe T 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 Safe T Group are associated (or correlated) with Amos Luzon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amos Luzon Development has no effect on the direction of Safe T i.e., Safe T and Amos Luzon go up and down completely randomly.

Pair Corralation between Safe T and Amos Luzon

Assuming the 90 days trading horizon Safe T Group is expected to generate 1.98 times more return on investment than Amos Luzon. However, Safe T is 1.98 times more volatile than Amos Luzon Development. It trades about 0.06 of its potential returns per unit of risk. Amos Luzon Development is currently generating about -0.06 per unit of risk. If you would invest  97,400  in Safe T Group on February 4, 2024 and sell it today you would earn a total of  2,700  from holding Safe T Group or generate 2.77% return on investment over 90 days.

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

Safe T Group  vs.  Amos Luzon Development

Safe T Group

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Safe T Group are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Safe T sustained solid returns over the last few months and may actually be approaching a breakup point.

Amos Luzon Development

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Amos Luzon Development are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Amos Luzon may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Pair Trading with Safe T and Amos Luzon

The main advantage of trading using opposite Safe T and Amos Luzon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Safe T position performs unexpectedly, Amos Luzon 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 Amos Luzon will offset losses from the drop in Amos Luzon's long position.

The idea behind Safe T Group and Amos Luzon Development 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.

Check out your portfolio center.

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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.