Correlation Between Alchemy Resources and AiMedia Technologies
Can any of the company-specific risk be diversified away by investing in both Alchemy Resources and AiMedia Technologies 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 Alchemy Resources and AiMedia Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alchemy Resources and AiMedia Technologies, you can compare the effects of market volatilities on Alchemy Resources and AiMedia Technologies 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 Alchemy Resources with a short position of AiMedia Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alchemy Resources and AiMedia Technologies.
Diversification Opportunities for Alchemy Resources and AiMedia Technologies
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Alchemy and AiMedia is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Alchemy Resources and AiMedia Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AiMedia Technologies and Alchemy Resources 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 Alchemy Resources are associated (or correlated) with AiMedia Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AiMedia Technologies has no effect on the direction of Alchemy Resources i.e., Alchemy Resources and AiMedia Technologies go up and down completely randomly.
Pair Corralation between Alchemy Resources and AiMedia Technologies
Assuming the 90 days trading horizon Alchemy Resources is expected to generate 1.34 times more return on investment than AiMedia Technologies. However, Alchemy Resources is 1.34 times more volatile than AiMedia Technologies. It trades about 0.03 of its potential returns per unit of risk. AiMedia Technologies is currently generating about -0.02 per unit of risk. If you would invest 0.70 in Alchemy Resources on September 1, 2024 and sell it today you would earn a total of 0.00 from holding Alchemy Resources or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Alchemy Resources vs. AiMedia Technologies
Performance |
| Timeline |
| Alchemy Resources |
| AiMedia Technologies |
Alchemy Resources and AiMedia Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alchemy Resources and AiMedia Technologies
The main advantage of trading using opposite Alchemy Resources and AiMedia Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alchemy Resources position performs unexpectedly, AiMedia Technologies 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 AiMedia Technologies will offset losses from the drop in AiMedia Technologies' long position.| Alchemy Resources vs. AiMedia Technologies | Alchemy Resources vs. Charter Hall Retail | Alchemy Resources vs. Lendlease Group | Alchemy Resources vs. EROAD |
| AiMedia Technologies vs. iShares Global Healthcare | AiMedia Technologies vs. Australian Dairy Farms | AiMedia Technologies vs. Adriatic Metals Plc | AiMedia Technologies vs. Australian Agricultural |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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