Correlation Between Ampco Pittsburgh and Despegar Corp

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

By analyzing existing cross correlation between Ampco Pittsburgh and Despegar Corp, you can compare the effects of market volatilities on Ampco Pittsburgh and Despegar Corp 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 Despegar Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ampco Pittsburgh and Despegar Corp.

Diversification Opportunities for Ampco Pittsburgh and Despegar Corp

-0.68

Correlation Coefficient

Ampco Pittsburgh  Despegar Corp

Excellent diversification

The 3 months correlation between Ampco and Despegar is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Ampco Pittsburgh and Despegar Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Despegar Corp 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 Despegar Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Despegar Corp has no effect on the direction of Ampco Pittsburgh i.e., Ampco Pittsburgh and Despegar Corp go up and down completely randomly.

Pair Corralation between Ampco Pittsburgh and Despegar Corp

Allowing for the 90-day total investment horizon Ampco Pittsburgh is expected to under-perform the Despegar Corp. In addition to that, Ampco Pittsburgh is 1.12 times more volatile than Despegar Corp. It trades about -0.07 of its total potential returns per unit of risk. Despegar Corp is currently generating about 0.08 per unit of volatility. If you would invest  845.00  in Despegar Corp on January 31, 2024 and sell it today you would earn a total of  374.00  from holding Despegar Corp or generate 44.26% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	99.46%
Values	Daily Returns

Ampco Pittsburgh  vs.  Despegar Corp

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 latest inconsistent performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Despegar Corp

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Despegar Corp are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Despegar Corp reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ampco Pittsburgh and Despegar Corp

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

The idea behind Ampco Pittsburgh and Despegar Corp 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.