Correlation Between AMG Advanced and Target Healthcare
Can any of the company-specific risk be diversified away by investing in both AMG Advanced and Target Healthcare 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 Target Healthcare 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 Target Healthcare REIT, you can compare the effects of market volatilities on AMG Advanced and Target Healthcare 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 Target Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of AMG Advanced and Target Healthcare.
Diversification Opportunities for AMG Advanced and Target Healthcare
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between AMG and Target is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding AMG Advanced Metallurgical and Target Healthcare REIT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Target Healthcare REIT 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 Target Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Target Healthcare REIT has no effect on the direction of AMG Advanced i.e., AMG Advanced and Target Healthcare go up and down completely randomly.
Pair Corralation between AMG Advanced and Target Healthcare
Assuming the 90 days trading horizon AMG Advanced Metallurgical is expected to under-perform the Target Healthcare. In addition to that, AMG Advanced is 1.46 times more volatile than Target Healthcare REIT. It trades about -0.07 of its total potential returns per unit of risk. Target Healthcare REIT is currently generating about 0.03 per unit of volatility. If you would invest 7,101 in Target Healthcare REIT on October 31, 2024 and sell it today you would earn a total of 1,199 from holding Target Healthcare REIT or generate 16.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.8% |
| Values | Daily Returns |
AMG Advanced Metallurgical vs. Target Healthcare REIT
Performance |
| Timeline |
| AMG Advanced Metallu |
| Target Healthcare REIT |
AMG Advanced and Target Healthcare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AMG Advanced and Target Healthcare
The main advantage of trading using opposite AMG Advanced and Target Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AMG Advanced position performs unexpectedly, Target Healthcare 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 Target Healthcare will offset losses from the drop in Target Healthcare's long position.| AMG Advanced vs. Hochschild Mining plc | AMG Advanced vs. mobilezone holding AG | AMG Advanced vs. Gaming Realms plc | AMG Advanced vs. MTI Wireless Edge |
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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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