Correlation Between Auto Trader and AMG Advanced
Can any of the company-specific risk be diversified away by investing in both Auto Trader and AMG Advanced 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 Auto Trader and AMG Advanced into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Auto Trader Group and AMG Advanced Metallurgical, you can compare the effects of market volatilities on Auto Trader and AMG Advanced 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 Auto Trader with a short position of AMG Advanced. Check out your portfolio center. Please also check ongoing floating volatility patterns of Auto Trader and AMG Advanced.
Diversification Opportunities for Auto Trader and AMG Advanced
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Auto and AMG is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Auto Trader Group and AMG Advanced Metallurgical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AMG Advanced Metallu and Auto Trader 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 Auto Trader Group are associated (or correlated) with AMG Advanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AMG Advanced Metallu has no effect on the direction of Auto Trader i.e., Auto Trader and AMG Advanced go up and down completely randomly.
Pair Corralation between Auto Trader and AMG Advanced
Assuming the 90 days trading horizon Auto Trader Group is expected to generate 1.05 times more return on investment than AMG Advanced. However, Auto Trader is 1.05 times more volatile than AMG Advanced Metallurgical. It trades about -0.13 of its potential returns per unit of risk. AMG Advanced Metallurgical is currently generating about -0.19 per unit of risk. If you would invest 88,040 in Auto Trader Group on August 26, 2024 and sell it today you would lose (5,040) from holding Auto Trader Group or give up 5.72% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Auto Trader Group vs. AMG Advanced Metallurgical
Performance |
| Timeline |
| Auto Trader Group |
| AMG Advanced Metallu |
Auto Trader and AMG Advanced Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Auto Trader and AMG Advanced
The main advantage of trading using opposite Auto Trader and AMG Advanced positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Auto Trader position performs unexpectedly, AMG Advanced 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 AMG Advanced will offset losses from the drop in AMG Advanced's long position.| Auto Trader vs. Ondine Biomedical | Auto Trader vs. Europa Metals | Auto Trader vs. Revolution Beauty Group | Auto Trader vs. Biome Technologies Plc |
| AMG Advanced vs. Samsung Electronics Co | AMG Advanced vs. Samsung Electronics Co | AMG Advanced vs. Hyundai Motor | AMG Advanced vs. Toyota Motor Corp |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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