Correlation Between AMG Advanced and Aalberts Industries
Can any of the company-specific risk be diversified away by investing in both AMG Advanced and Aalberts Industries 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 Aalberts Industries 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 Aalberts Industries NV, you can compare the effects of market volatilities on AMG Advanced and Aalberts Industries 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 Aalberts Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of AMG Advanced and Aalberts Industries.
Diversification Opportunities for AMG Advanced and Aalberts Industries
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between AMG and Aalberts is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding AMG Advanced Metallurgical and Aalberts Industries NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aalberts Industries 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 Aalberts Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aalberts Industries has no effect on the direction of AMG Advanced i.e., AMG Advanced and Aalberts Industries go up and down completely randomly.
Pair Corralation between AMG Advanced and Aalberts Industries
Assuming the 90 days trading horizon AMG Advanced Metallurgical is expected to under-perform the Aalberts Industries. But the stock apears to be less risky and, when comparing its historical volatility, AMG Advanced Metallurgical is 1.04 times less risky than Aalberts Industries. The stock trades about -0.12 of its potential returns per unit of risk. The Aalberts Industries NV is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 3,352 in Aalberts Industries NV on August 24, 2024 and sell it today you would earn a total of 36.00 from holding Aalberts Industries NV or generate 1.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
AMG Advanced Metallurgical vs. Aalberts Industries NV
Performance |
| Timeline |
| AMG Advanced Metallu |
| Aalberts Industries |
AMG Advanced and Aalberts Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AMG Advanced and Aalberts Industries
The main advantage of trading using opposite AMG Advanced and Aalberts Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AMG Advanced position performs unexpectedly, Aalberts Industries 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 Aalberts Industries will offset losses from the drop in Aalberts Industries' long position.| AMG Advanced vs. BE Semiconductor Industries | AMG Advanced vs. TKH Group NV | AMG Advanced vs. OCI NV | AMG Advanced vs. Aalberts Industries NV |
| Aalberts Industries vs. Pharming Group NV | Aalberts Industries vs. AMG Advanced Metallurgical | Aalberts Industries vs. Alfen Beheer BV | Aalberts Industries vs. BE Semiconductor Industries |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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