Correlation Between ARN Media and AMP
Can any of the company-specific risk be diversified away by investing in both ARN Media and AMP 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 ARN Media and AMP into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ARN Media Limited and AMP, you can compare the effects of market volatilities on ARN Media and AMP 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 ARN Media with a short position of AMP. Check out your portfolio center. Please also check ongoing floating volatility patterns of ARN Media and AMP.
Diversification Opportunities for ARN Media and AMP
Poor diversification
The 3 months correlation between ARN and AMP is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding ARN Media Limited and AMP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AMP and ARN Media 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 ARN Media Limited are associated (or correlated) with AMP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AMP has no effect on the direction of ARN Media i.e., ARN Media and AMP go up and down completely randomly.
Pair Corralation between ARN Media and AMP
Assuming the 90 days trading horizon ARN Media Limited is expected to under-perform the AMP. In addition to that, ARN Media is 1.09 times more volatile than AMP. It trades about -0.01 of its total potential returns per unit of risk. AMP is currently generating about 0.13 per unit of volatility. If you would invest 107.00 in AMP on September 1, 2024 and sell it today you would earn a total of 49.00 from holding AMP or generate 45.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ARN Media Limited vs. AMP
Performance |
| Timeline |
| ARN Media Limited |
| AMP |
ARN Media and AMP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ARN Media and AMP
The main advantage of trading using opposite ARN Media and AMP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ARN Media position performs unexpectedly, AMP 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 AMP will offset losses from the drop in AMP's long position.| ARN Media vs. Aneka Tambang Tbk | ARN Media vs. BHP Group Limited | ARN Media vs. Commonwealth Bank of | ARN Media vs. Commonwealth 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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