Correlation Between Aluminumof China and AM EAGLE
Can any of the company-specific risk be diversified away by investing in both Aluminumof China and AM EAGLE 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 Aluminumof China and AM EAGLE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aluminum of and AM EAGLE OUTFITTERS, you can compare the effects of market volatilities on Aluminumof China and AM EAGLE 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 Aluminumof China with a short position of AM EAGLE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aluminumof China and AM EAGLE.
Diversification Opportunities for Aluminumof China and AM EAGLE
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Aluminumof and AFG is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Aluminum of and AM EAGLE OUTFITTERS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AM EAGLE OUTFITTERS and Aluminumof China 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 Aluminum of are associated (or correlated) with AM EAGLE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AM EAGLE OUTFITTERS has no effect on the direction of Aluminumof China i.e., Aluminumof China and AM EAGLE go up and down completely randomly.
Pair Corralation between Aluminumof China and AM EAGLE
Assuming the 90 days horizon Aluminum of is expected to generate 1.42 times more return on investment than AM EAGLE. However, Aluminumof China is 1.42 times more volatile than AM EAGLE OUTFITTERS. It trades about -0.04 of its potential returns per unit of risk. AM EAGLE OUTFITTERS is currently generating about -0.07 per unit of risk. If you would invest 64.00 in Aluminum of on September 13, 2024 and sell it today you would lose (7.00) from holding Aluminum of or give up 10.94% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aluminum of vs. AM EAGLE OUTFITTERS
Performance |
| Timeline |
| Aluminumof China |
| AM EAGLE OUTFITTERS |
Aluminumof China and AM EAGLE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aluminumof China and AM EAGLE
The main advantage of trading using opposite Aluminumof China and AM EAGLE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aluminumof China position performs unexpectedly, AM EAGLE 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 AM EAGLE will offset losses from the drop in AM EAGLE's long position.| Aluminumof China vs. Norsk Hydro ASA | Aluminumof China vs. Kaiser Aluminum | Aluminumof China vs. Superior Plus Corp | Aluminumof China vs. SIVERS SEMICONDUCTORS AB |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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