Correlation Between AMG Advanced and LifeSafe Holdings
Can any of the company-specific risk be diversified away by investing in both AMG Advanced and LifeSafe Holdings 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 LifeSafe Holdings 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 LifeSafe Holdings PLC, you can compare the effects of market volatilities on AMG Advanced and LifeSafe Holdings 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 LifeSafe Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of AMG Advanced and LifeSafe Holdings.
Diversification Opportunities for AMG Advanced and LifeSafe Holdings
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between AMG and LifeSafe is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding AMG Advanced Metallurgical and LifeSafe Holdings PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LifeSafe Holdings PLC 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 LifeSafe Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LifeSafe Holdings PLC has no effect on the direction of AMG Advanced i.e., AMG Advanced and LifeSafe Holdings go up and down completely randomly.
Pair Corralation between AMG Advanced and LifeSafe Holdings
Assuming the 90 days trading horizon AMG Advanced Metallurgical is expected to generate 0.98 times more return on investment than LifeSafe Holdings. However, AMG Advanced Metallurgical is 1.02 times less risky than LifeSafe Holdings. It trades about -0.14 of its potential returns per unit of risk. LifeSafe Holdings PLC is currently generating about -0.32 per unit of risk. If you would invest 1,562 in AMG Advanced Metallurgical on September 4, 2024 and sell it today you would lose (105.00) from holding AMG Advanced Metallurgical or give up 6.72% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
AMG Advanced Metallurgical vs. LifeSafe Holdings PLC
Performance |
| Timeline |
| AMG Advanced Metallu |
| LifeSafe Holdings PLC |
AMG Advanced and LifeSafe Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AMG Advanced and LifeSafe Holdings
The main advantage of trading using opposite AMG Advanced and LifeSafe Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AMG Advanced position performs unexpectedly, LifeSafe Holdings 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 LifeSafe Holdings will offset losses from the drop in LifeSafe Holdings' long position.| AMG Advanced vs. Coor Service Management | AMG Advanced vs. Telecom Italia SpA | AMG Advanced vs. Zoom Video Communications | AMG Advanced vs. Vulcan Materials Co |
| LifeSafe Holdings vs. Hyundai Motor | LifeSafe Holdings vs. Toyota Motor Corp | LifeSafe Holdings vs. SoftBank Group Corp | LifeSafe Holdings vs. Halyk Bank of |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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