Correlation Between AMG Advanced and Synthomer Plc
Can any of the company-specific risk be diversified away by investing in both AMG Advanced and Synthomer Plc 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 Synthomer Plc 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 Synthomer plc, you can compare the effects of market volatilities on AMG Advanced and Synthomer Plc 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 Synthomer Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of AMG Advanced and Synthomer Plc.
Diversification Opportunities for AMG Advanced and Synthomer Plc
-0.19 | Correlation Coefficient |
Good diversification
The 3 months correlation between AMG and Synthomer is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding AMG Advanced Metallurgical and Synthomer plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Synthomer 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 Synthomer Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Synthomer plc has no effect on the direction of AMG Advanced i.e., AMG Advanced and Synthomer Plc go up and down completely randomly.
Pair Corralation between AMG Advanced and Synthomer Plc
Assuming the 90 days trading horizon AMG Advanced Metallurgical is expected to under-perform the Synthomer Plc. But the stock apears to be less risky and, when comparing its historical volatility, AMG Advanced Metallurgical is 1.5 times less risky than Synthomer Plc. The stock trades about -0.19 of its potential returns per unit of risk. The Synthomer plc is currently generating about -0.1 of returns per unit of risk over similar time horizon. If you would invest 17,560 in Synthomer plc on August 26, 2024 and sell it today you would lose (1,160) from holding Synthomer plc or give up 6.61% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
AMG Advanced Metallurgical vs. Synthomer plc
Performance |
| Timeline |
| AMG Advanced Metallu |
| Synthomer plc |
AMG Advanced and Synthomer Plc Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AMG Advanced and Synthomer Plc
The main advantage of trading using opposite AMG Advanced and Synthomer Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AMG Advanced position performs unexpectedly, Synthomer Plc 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 Synthomer Plc will offset losses from the drop in Synthomer Plc'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 |
| Synthomer Plc vs. Givaudan SA | Synthomer Plc vs. Antofagasta PLC | Synthomer Plc vs. Centamin PLC | Synthomer Plc vs. Atalaya Mining |
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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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