Correlation Between AMG Advanced and Reinet Investments
Can any of the company-specific risk be diversified away by investing in both AMG Advanced and Reinet Investments 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 Reinet Investments 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 Reinet Investments SCA, you can compare the effects of market volatilities on AMG Advanced and Reinet Investments 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 Reinet Investments. Check out your portfolio center. Please also check ongoing floating volatility patterns of AMG Advanced and Reinet Investments.
Diversification Opportunities for AMG Advanced and Reinet Investments
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between AMG and Reinet is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding AMG Advanced Metallurgical and Reinet Investments SCA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Reinet Investments SCA 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 Reinet Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Reinet Investments SCA has no effect on the direction of AMG Advanced i.e., AMG Advanced and Reinet Investments go up and down completely randomly.
Pair Corralation between AMG Advanced and Reinet Investments
Assuming the 90 days trading horizon AMG Advanced Metallurgical is expected to generate 1.65 times more return on investment than Reinet Investments. However, AMG Advanced is 1.65 times more volatile than Reinet Investments SCA. It trades about 0.05 of its potential returns per unit of risk. Reinet Investments SCA is currently generating about -0.04 per unit of risk. If you would invest 1,573 in AMG Advanced Metallurgical on November 18, 2024 and sell it today you would earn a total of 44.00 from holding AMG Advanced Metallurgical or generate 2.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
AMG Advanced Metallurgical vs. Reinet Investments SCA
Performance |
| Timeline |
| AMG Advanced Metallu |
| Reinet Investments SCA |
AMG Advanced and Reinet Investments Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AMG Advanced and Reinet Investments
The main advantage of trading using opposite AMG Advanced and Reinet Investments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AMG Advanced position performs unexpectedly, Reinet Investments 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 Reinet Investments will offset losses from the drop in Reinet Investments' 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 |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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