Correlation Between Environmental and Ambertech
Can any of the company-specific risk be diversified away by investing in both Environmental and Ambertech 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 Environmental and Ambertech into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The Environmental Group and Ambertech, you can compare the effects of market volatilities on Environmental and Ambertech 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 Environmental with a short position of Ambertech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Environmental and Ambertech.
Diversification Opportunities for Environmental and Ambertech
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Environmental and Ambertech is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding The Environmental Group and Ambertech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ambertech and Environmental 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 The Environmental Group are associated (or correlated) with Ambertech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ambertech has no effect on the direction of Environmental i.e., Environmental and Ambertech go up and down completely randomly.
Pair Corralation between Environmental and Ambertech
Assuming the 90 days trading horizon The Environmental Group is expected to generate 1.19 times more return on investment than Ambertech. However, Environmental is 1.19 times more volatile than Ambertech. It trades about -0.04 of its potential returns per unit of risk. Ambertech is currently generating about -0.22 per unit of risk. If you would invest 29.00 in The Environmental Group on October 18, 2024 and sell it today you would lose (1.00) from holding The Environmental Group or give up 3.45% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Environmental Group vs. Ambertech
Performance |
| Timeline |
| The Environmental |
| Ambertech |
Environmental and Ambertech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Environmental and Ambertech
The main advantage of trading using opposite Environmental and Ambertech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Environmental position performs unexpectedly, Ambertech 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 Ambertech will offset losses from the drop in Ambertech's long position.| Environmental vs. Macquarie Technology Group | Environmental vs. Aurelia Metals | Environmental vs. Stelar Metals | Environmental vs. TPG Telecom |
| Ambertech vs. Legacy Iron Ore | Ambertech vs. Hawsons Iron | Ambertech vs. The Environmental Group | Ambertech vs. Tombador Iron |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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