Correlation Between AMG Advanced and Compagnie Plastic
Can any of the company-specific risk be diversified away by investing in both AMG Advanced and Compagnie Plastic 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 Compagnie Plastic 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 Compagnie Plastic Omnium, you can compare the effects of market volatilities on AMG Advanced and Compagnie Plastic 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 Compagnie Plastic. Check out your portfolio center. Please also check ongoing floating volatility patterns of AMG Advanced and Compagnie Plastic.
Diversification Opportunities for AMG Advanced and Compagnie Plastic
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between AMG and Compagnie is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding AMG Advanced Metallurgical and Compagnie Plastic Omnium in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Compagnie Plastic Omnium 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 Compagnie Plastic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Compagnie Plastic Omnium has no effect on the direction of AMG Advanced i.e., AMG Advanced and Compagnie Plastic go up and down completely randomly.
Pair Corralation between AMG Advanced and Compagnie Plastic
Assuming the 90 days trading horizon AMG Advanced Metallurgical is expected to under-perform the Compagnie Plastic. But the stock apears to be less risky and, when comparing its historical volatility, AMG Advanced Metallurgical is 1.13 times less risky than Compagnie Plastic. The stock trades about -0.1 of its potential returns per unit of risk. The Compagnie Plastic Omnium is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest 1,057 in Compagnie Plastic Omnium on August 26, 2024 and sell it today you would lose (250.00) from holding Compagnie Plastic Omnium or give up 23.65% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
AMG Advanced Metallurgical vs. Compagnie Plastic Omnium
Performance |
| Timeline |
| AMG Advanced Metallu |
| Compagnie Plastic Omnium |
AMG Advanced and Compagnie Plastic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AMG Advanced and Compagnie Plastic
The main advantage of trading using opposite AMG Advanced and Compagnie Plastic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AMG Advanced position performs unexpectedly, Compagnie Plastic 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 Compagnie Plastic will offset losses from the drop in Compagnie Plastic'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 |
| Compagnie Plastic vs. Samsung Electronics Co | Compagnie Plastic vs. Samsung Electronics Co | Compagnie Plastic vs. Hyundai Motor | Compagnie Plastic 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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