Correlation Between Amazing Microelectronic and Ambassador Hotel
Can any of the company-specific risk be diversified away by investing in both Amazing Microelectronic and Ambassador Hotel 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 Amazing Microelectronic and Ambassador Hotel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Amazing Microelectronic and Ambassador Hotel, you can compare the effects of market volatilities on Amazing Microelectronic and Ambassador Hotel 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 Amazing Microelectronic with a short position of Ambassador Hotel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amazing Microelectronic and Ambassador Hotel.
Diversification Opportunities for Amazing Microelectronic and Ambassador Hotel
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Amazing and Ambassador is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Amazing Microelectronic and Ambassador Hotel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ambassador Hotel and Amazing Microelectronic 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 Amazing Microelectronic are associated (or correlated) with Ambassador Hotel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ambassador Hotel has no effect on the direction of Amazing Microelectronic i.e., Amazing Microelectronic and Ambassador Hotel go up and down completely randomly.
Pair Corralation between Amazing Microelectronic and Ambassador Hotel
Assuming the 90 days trading horizon Amazing Microelectronic is expected to under-perform the Ambassador Hotel. But the stock apears to be less risky and, when comparing its historical volatility, Amazing Microelectronic is 1.55 times less risky than Ambassador Hotel. The stock trades about -0.12 of its potential returns per unit of risk. The Ambassador Hotel is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest 5,830 in Ambassador Hotel on September 1, 2024 and sell it today you would lose (180.00) from holding Ambassador Hotel or give up 3.09% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Amazing Microelectronic vs. Ambassador Hotel
Performance |
| Timeline |
| Amazing Microelectronic |
| Ambassador Hotel |
Amazing Microelectronic and Ambassador Hotel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Amazing Microelectronic and Ambassador Hotel
The main advantage of trading using opposite Amazing Microelectronic and Ambassador Hotel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amazing Microelectronic position performs unexpectedly, Ambassador Hotel 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 Ambassador Hotel will offset losses from the drop in Ambassador Hotel's long position.| Amazing Microelectronic vs. United Microelectronics | Amazing Microelectronic vs. Winbond Electronics Corp |
| Ambassador Hotel vs. Chaintech Technology Corp | Ambassador Hotel vs. AVerMedia Technologies | Ambassador Hotel vs. Avision | Ambassador Hotel vs. Clevo Co |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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