Correlation Between Acuity Brands and Amprius Technologies

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

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

Diversification Opportunities for Acuity Brands and Amprius Technologies

Very weak diversification

The 3 months correlation between Acuity and Amprius is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Acuity Brands and Amprius Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amprius Technologies and Acuity Brands 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 Acuity Brands are associated (or correlated) with Amprius Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amprius Technologies has no effect on the direction of Acuity Brands i.e., Acuity Brands and Amprius Technologies go up and down completely randomly.

Pair Corralation between Acuity Brands and Amprius Technologies

Considering the 90-day investment horizon Acuity Brands is expected to generate 0.16 times more return on investment than Amprius Technologies. However, Acuity Brands is 6.28 times less risky than Amprius Technologies. It trades about 0.01 of its potential returns per unit of risk. Amprius Technologies is currently generating about -0.13 per unit of risk. If you would invest  16,414  in Acuity Brands on June 27, 2023 and sell it today you would earn a total of  6.00  from holding Acuity Brands or generate 0.04% return on investment over 90 days.

Acuity Brands  vs.  Amprius Technologies

Acuity Brands

Acuity Performance

2 of 100

Compared to the overall equity markets, risk-adjusted returns on investments in Acuity Brands are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong basic indicators, Acuity Brands is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Amprius Technologies

Amprius Performance

0 of 100

Over the last 90 days Amprius Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in October 2023. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Acuity Brands and Amprius Technologies

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

The idea behind Acuity Brands and Amprius Technologies 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.