Correlation Between AMG Advanced and Microchip Technology
Can any of the company-specific risk be diversified away by investing in both AMG Advanced and Microchip Technology 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 AMG Advanced and Microchip Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AMG Advanced Metallurgical and Microchip Technology, you can compare the effects of market volatilities on AMG Advanced and Microchip Technology 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 AMG Advanced with a short position of Microchip Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of AMG Advanced and Microchip Technology.
Diversification Opportunities for AMG Advanced and Microchip Technology
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between AMG and Microchip is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding AMG Advanced Metallurgical and Microchip Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Microchip Technology and AMG Advanced 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 AMG Advanced Metallurgical are associated (or correlated) with Microchip Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Microchip Technology has no effect on the direction of AMG Advanced i.e., AMG Advanced and Microchip Technology go up and down completely randomly.
Pair Corralation between AMG Advanced and Microchip Technology
Assuming the 90 days trading horizon AMG Advanced Metallurgical is expected to under-perform the Microchip Technology. In addition to that, AMG Advanced is 1.09 times more volatile than Microchip Technology. It trades about -0.06 of its total potential returns per unit of risk. Microchip Technology is currently generating about 0.0 per unit of volatility. If you would invest 7,387 in Microchip Technology on August 25, 2024 and sell it today you would lose (806.00) from holding Microchip Technology or give up 10.91% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.2% |
| Values | Daily Returns |
AMG Advanced Metallurgical vs. Microchip Technology
Performance |
| Timeline |
| AMG Advanced Metallu |
| Microchip Technology |
AMG Advanced and Microchip Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AMG Advanced and Microchip Technology
The main advantage of trading using opposite AMG Advanced and Microchip Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AMG Advanced position performs unexpectedly, Microchip Technology 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 Microchip Technology will offset losses from the drop in Microchip Technology's long position.| AMG Advanced vs. Samsung Electronics Co | AMG Advanced vs. Samsung Electronics Co | AMG Advanced vs. Hyundai Motor | AMG Advanced vs. Toyota Motor Corp |
| Microchip Technology vs. Samsung Electronics Co | Microchip Technology vs. Samsung Electronics Co | Microchip Technology vs. Hyundai Motor | Microchip Technology vs. Toyota Motor Corp |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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