Correlation Between AMG Advanced and AMS Small
Can any of the company-specific risk be diversified away by investing in both AMG Advanced and AMS Small 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 AMS Small 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 AMS Small Cap, you can compare the effects of market volatilities on AMG Advanced and AMS Small 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 AMS Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of AMG Advanced and AMS Small.
Diversification Opportunities for AMG Advanced and AMS Small
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between AMG and AMS is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding AMG Advanced Metallurgical and AMS Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AMS Small Cap 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 AMS Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AMS Small Cap has no effect on the direction of AMG Advanced i.e., AMG Advanced and AMS Small go up and down completely randomly.
Pair Corralation between AMG Advanced and AMS Small
Assuming the 90 days trading horizon AMG Advanced Metallurgical is expected to under-perform the AMS Small. In addition to that, AMG Advanced is 2.64 times more volatile than AMS Small Cap. It trades about -0.05 of its total potential returns per unit of risk. AMS Small Cap is currently generating about -0.01 per unit of volatility. If you would invest 124,365 in AMS Small Cap on August 25, 2024 and sell it today you would lose (6,050) from holding AMS Small Cap or give up 4.86% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.8% |
| Values | Daily Returns |
AMG Advanced Metallurgical vs. AMS Small Cap
Performance |
| Timeline |
AMG Advanced and AMS Small Volatility Contrast
Predicted Return Density |
| Returns |
AMG Advanced Metallurgical
Pair trading matchups for AMG Advanced
AMS Small Cap
Pair trading matchups for AMS Small
Pair Trading with AMG Advanced and AMS Small
The main advantage of trading using opposite AMG Advanced and AMS Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AMG Advanced position performs unexpectedly, AMS Small 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 AMS Small will offset losses from the drop in AMS Small's 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 |
| AMS Small vs. BE Semiconductor Industries | AMS Small vs. Allfunds Group | AMS Small vs. AMG Advanced Metallurgical | AMS Small vs. Flow Traders BV |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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