Correlation Between Superior Uniform and American Outdoor

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

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

Diversification Opportunities for Superior Uniform and American Outdoor

-0.16

Correlation Coefficient

Superior Uniform  American Outdoor

Good diversification

The 3 months correlation between Superior and American is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Superior Uniform Group and American Outdoor Brands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Outdoor Brands and Superior Uniform 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 Superior Uniform Group are associated (or correlated) with American Outdoor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Outdoor Brands has no effect on the direction of Superior Uniform i.e., Superior Uniform and American Outdoor go up and down completely randomly.

Pair Corralation between Superior Uniform and American Outdoor

Considering the 90-day investment horizon Superior Uniform Group is expected to generate 1.03 times more return on investment than American Outdoor. However, Superior Uniform is 1.03 times more volatile than American Outdoor Brands. It trades about 0.01 of its potential returns per unit of risk. American Outdoor Brands is currently generating about -0.05 per unit of risk. If you would invest  1,657  in Superior Uniform Group on January 20, 2024 and sell it today you would earn a total of  1.00  from holding Superior Uniform Group or generate 0.06% return on investment over 90 days.

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

Superior Uniform Group  vs.  American Outdoor Brands

Superior Uniform

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Superior Uniform Group are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Superior Uniform exhibited solid returns over the last few months and may actually be approaching a breakup point.

American Outdoor Brands

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days American Outdoor Brands has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, American Outdoor is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Superior Uniform and American Outdoor

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

The idea behind Superior Uniform Group and American Outdoor Brands 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.