Correlation Between Amedeo Air and Associated British

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Can any of the company-specific risk be diversified away by investing in both Amedeo Air and Associated British 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 Amedeo Air and Associated British into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Amedeo Air Four and Associated British Foods, you can compare the effects of market volatilities on Amedeo Air and Associated British 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 Amedeo Air with a short position of Associated British. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amedeo Air and Associated British.

Diversification Opportunities for Amedeo Air and Associated British

-0.39
  Correlation Coefficient

Very good diversification

The 3 months correlation between Amedeo and Associated is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Amedeo Air Four and Associated British Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Associated British Foods and Amedeo Air 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 Amedeo Air Four are associated (or correlated) with Associated British. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Associated British Foods has no effect on the direction of Amedeo Air i.e., Amedeo Air and Associated British go up and down completely randomly.

Pair Corralation between Amedeo Air and Associated British

Assuming the 90 days trading horizon Amedeo Air Four is expected to generate 0.57 times more return on investment than Associated British. However, Amedeo Air Four is 1.75 times less risky than Associated British. It trades about 0.47 of its potential returns per unit of risk. Associated British Foods is currently generating about -0.1 per unit of risk. If you would invest  5,070  in Amedeo Air Four on September 12, 2024 and sell it today you would earn a total of  350.00  from holding Amedeo Air Four or generate 6.9% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy95.65%
ValuesDaily Returns

Amedeo Air Four  vs.  Associated British Foods

 Performance 
       Timeline  
Amedeo Air Four 

Risk-Adjusted Performance

18 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Amedeo Air Four are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, Amedeo Air may actually be approaching a critical reversion point that can send shares even higher in January 2025.
Associated British Foods 

Risk-Adjusted Performance

1 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Associated British Foods are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, Associated British is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Amedeo Air and Associated British Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Amedeo Air and Associated British

The main advantage of trading using opposite Amedeo Air and Associated British positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amedeo Air position performs unexpectedly, Associated British 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 Associated British will offset losses from the drop in Associated British's long position.
The idea behind Amedeo Air Four and Associated British Foods pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.

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