Correlation Between AMS Small and Akzo Nobel
Can any of the company-specific risk be diversified away by investing in both AMS Small and Akzo Nobel 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 AMS Small and Akzo Nobel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AMS Small Cap and Akzo Nobel NV, you can compare the effects of market volatilities on AMS Small and Akzo Nobel 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 AMS Small with a short position of Akzo Nobel. Check out your portfolio center. Please also check ongoing floating volatility patterns of AMS Small and Akzo Nobel.
Diversification Opportunities for AMS Small and Akzo Nobel
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between AMS and Akzo is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding AMS Small Cap and Akzo Nobel NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Akzo Nobel NV and AMS Small 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 AMS Small Cap are associated (or correlated) with Akzo Nobel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Akzo Nobel NV has no effect on the direction of AMS Small i.e., AMS Small and Akzo Nobel go up and down completely randomly.
Pair Corralation between AMS Small and Akzo Nobel
Assuming the 90 days trading horizon AMS Small Cap is expected to generate 0.74 times more return on investment than Akzo Nobel. However, AMS Small Cap is 1.35 times less risky than Akzo Nobel. It trades about 0.01 of its potential returns per unit of risk. Akzo Nobel NV is currently generating about -0.06 per unit of risk. If you would invest 119,764 in AMS Small Cap on September 2, 2024 and sell it today you would earn a total of 2,914 from holding AMS Small Cap or generate 2.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.6% |
| Values | Daily Returns |
AMS Small Cap vs. Akzo Nobel NV
Performance |
| Timeline |
AMS Small and Akzo Nobel Volatility Contrast
Predicted Return Density |
| Returns |
AMS Small Cap
Pair trading matchups for AMS Small
Akzo Nobel NV
Pair trading matchups for Akzo Nobel
Pair Trading with AMS Small and Akzo Nobel
The main advantage of trading using opposite AMS Small and Akzo Nobel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AMS Small position performs unexpectedly, Akzo Nobel 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 Akzo Nobel will offset losses from the drop in Akzo Nobel's long position.| AMS Small vs. Reinet Investments SCA | AMS Small vs. Sligro Food Group | AMS Small vs. SBM Offshore NV | AMS Small vs. Universal Music Group |
| Akzo Nobel vs. Randstad NV | Akzo Nobel vs. Koninklijke Philips NV | Akzo Nobel vs. Koninklijke KPN NV | Akzo Nobel vs. Aegon 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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