Correlation Between AMG Advanced and Law Debenture
Can any of the company-specific risk be diversified away by investing in both AMG Advanced and Law Debenture 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 Law Debenture 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 Law Debenture Corp, you can compare the effects of market volatilities on AMG Advanced and Law Debenture 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 Law Debenture. Check out your portfolio center. Please also check ongoing floating volatility patterns of AMG Advanced and Law Debenture.
Diversification Opportunities for AMG Advanced and Law Debenture
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between AMG and Law is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding AMG Advanced Metallurgical and Law Debenture Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Law Debenture Corp 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 Law Debenture. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Law Debenture Corp has no effect on the direction of AMG Advanced i.e., AMG Advanced and Law Debenture go up and down completely randomly.
Pair Corralation between AMG Advanced and Law Debenture
Assuming the 90 days trading horizon AMG Advanced Metallurgical is expected to under-perform the Law Debenture. In addition to that, AMG Advanced is 2.71 times more volatile than Law Debenture Corp. It trades about -0.05 of its total potential returns per unit of risk. Law Debenture Corp is currently generating about 0.08 per unit of volatility. If you would invest 76,612 in Law Debenture Corp on September 4, 2024 and sell it today you would earn a total of 13,788 from holding Law Debenture Corp or generate 18.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
AMG Advanced Metallurgical vs. Law Debenture Corp
Performance |
| Timeline |
| AMG Advanced Metallu |
| Law Debenture Corp |
AMG Advanced and Law Debenture Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AMG Advanced and Law Debenture
The main advantage of trading using opposite AMG Advanced and Law Debenture positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AMG Advanced position performs unexpectedly, Law Debenture 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 Law Debenture will offset losses from the drop in Law Debenture's 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 |
| Law Debenture vs. British American Tobacco | Law Debenture vs. AMG Advanced Metallurgical | Law Debenture vs. Cornish Metals | Law Debenture vs. Sovereign Metals |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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