Correlation Between AMMB Holdings and Summit Materials
Can any of the company-specific risk be diversified away by investing in both AMMB Holdings and Summit Materials 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 AMMB Holdings and Summit Materials into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AMMB Holdings Berhad and Summit Materials, you can compare the effects of market volatilities on AMMB Holdings and Summit Materials 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 AMMB Holdings with a short position of Summit Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of AMMB Holdings and Summit Materials.
Diversification Opportunities for AMMB Holdings and Summit Materials
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between AMMB and Summit is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding AMMB Holdings Berhad and Summit Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Summit Materials and AMMB Holdings 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 AMMB Holdings Berhad are associated (or correlated) with Summit Materials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Summit Materials has no effect on the direction of AMMB Holdings i.e., AMMB Holdings and Summit Materials go up and down completely randomly.
Pair Corralation between AMMB Holdings and Summit Materials
Assuming the 90 days horizon AMMB Holdings is expected to generate 1.2 times less return on investment than Summit Materials. But when comparing it to its historical volatility, AMMB Holdings Berhad is 1.53 times less risky than Summit Materials. It trades about 0.08 of its potential returns per unit of risk. Summit Materials is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 3,003 in Summit Materials on August 30, 2024 and sell it today you would earn a total of 2,106 from holding Summit Materials or generate 70.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
AMMB Holdings Berhad vs. Summit Materials
Performance |
| Timeline |
| AMMB Holdings Berhad |
| Summit Materials |
AMMB Holdings and Summit Materials Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AMMB Holdings and Summit Materials
The main advantage of trading using opposite AMMB Holdings and Summit Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AMMB Holdings position performs unexpectedly, Summit Materials 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 Summit Materials will offset losses from the drop in Summit Materials' long position.The idea behind AMMB Holdings Berhad and Summit Materials pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Summit Materials vs. Martin Marietta Materials | Summit Materials vs. Vulcan Materials | Summit Materials vs. United States Lime | Summit Materials vs. James Hardie 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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