Correlation Between AMG Advanced and Avantium Holding
Can any of the company-specific risk be diversified away by investing in both AMG Advanced and Avantium Holding 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 Avantium Holding 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 Avantium Holding BV, you can compare the effects of market volatilities on AMG Advanced and Avantium Holding 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 Avantium Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of AMG Advanced and Avantium Holding.
Diversification Opportunities for AMG Advanced and Avantium Holding
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between AMG and Avantium is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding AMG Advanced Metallurgical and Avantium Holding BV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Avantium Holding 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 Avantium Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Avantium Holding has no effect on the direction of AMG Advanced i.e., AMG Advanced and Avantium Holding go up and down completely randomly.
Pair Corralation between AMG Advanced and Avantium Holding
Assuming the 90 days trading horizon AMG Advanced Metallurgical is expected to generate 1.0 times more return on investment than Avantium Holding. However, AMG Advanced Metallurgical is 1.0 times less risky than Avantium Holding. It trades about -0.25 of its potential returns per unit of risk. Avantium Holding BV is currently generating about -0.32 per unit of risk. If you would invest 1,593 in AMG Advanced Metallurgical on August 30, 2024 and sell it today you would lose (164.00) from holding AMG Advanced Metallurgical or give up 10.3% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
AMG Advanced Metallurgical vs. Avantium Holding BV
Performance |
| Timeline |
| AMG Advanced Metallu |
| Avantium Holding |
AMG Advanced and Avantium Holding Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AMG Advanced and Avantium Holding
The main advantage of trading using opposite AMG Advanced and Avantium Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AMG Advanced position performs unexpectedly, Avantium Holding 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 Avantium Holding will offset losses from the drop in Avantium Holding's long position.| AMG Advanced vs. NN Group NV | AMG Advanced vs. Koninklijke Vopak NV | AMG Advanced vs. BE Semiconductor Industries | AMG Advanced vs. SBM Offshore NV |
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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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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