Correlation Between Telecom Italia and AMG Advanced
Can any of the company-specific risk be diversified away by investing in both Telecom Italia and AMG Advanced 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 Telecom Italia and AMG Advanced into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Telecom Italia SpA and AMG Advanced Metallurgical, you can compare the effects of market volatilities on Telecom Italia and AMG Advanced 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 Telecom Italia with a short position of AMG Advanced. Check out your portfolio center. Please also check ongoing floating volatility patterns of Telecom Italia and AMG Advanced.
Diversification Opportunities for Telecom Italia and AMG Advanced
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Telecom and AMG is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Telecom Italia SpA and AMG Advanced Metallurgical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AMG Advanced Metallu and Telecom Italia 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 Telecom Italia SpA are associated (or correlated) with AMG Advanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AMG Advanced Metallu has no effect on the direction of Telecom Italia i.e., Telecom Italia and AMG Advanced go up and down completely randomly.
Pair Corralation between Telecom Italia and AMG Advanced
Assuming the 90 days trading horizon Telecom Italia SpA is expected to generate 1.14 times more return on investment than AMG Advanced. However, Telecom Italia is 1.14 times more volatile than AMG Advanced Metallurgical. It trades about -0.06 of its potential returns per unit of risk. AMG Advanced Metallurgical is currently generating about -0.14 per unit of risk. If you would invest 27.00 in Telecom Italia SpA on September 4, 2024 and sell it today you would lose (1.00) from holding Telecom Italia SpA or give up 3.7% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Telecom Italia SpA vs. AMG Advanced Metallurgical
Performance |
| Timeline |
| Telecom Italia SpA |
| AMG Advanced Metallu |
Telecom Italia and AMG Advanced Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Telecom Italia and AMG Advanced
The main advantage of trading using opposite Telecom Italia and AMG Advanced positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Telecom Italia position performs unexpectedly, AMG Advanced 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 AMG Advanced will offset losses from the drop in AMG Advanced's long position.| Telecom Italia vs. Spirent Communications plc | Telecom Italia vs. Cairo Communication SpA | Telecom Italia vs. Zegona Communications Plc | Telecom Italia vs. Verizon Communications |
| AMG Advanced vs. Coor Service Management | AMG Advanced vs. Telecom Italia SpA | AMG Advanced vs. Zoom Video Communications | AMG Advanced vs. Vulcan Materials Co |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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