Correlation Between Flow Traders and AMS Small
Can any of the company-specific risk be diversified away by investing in both Flow Traders and AMS Small 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 Flow Traders and AMS Small into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Flow Traders BV and AMS Small Cap, you can compare the effects of market volatilities on Flow Traders and AMS Small 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 Flow Traders with a short position of AMS Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Flow Traders and AMS Small.
Diversification Opportunities for Flow Traders and AMS Small
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Flow and AMS is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Flow Traders BV and AMS Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AMS Small Cap and Flow Traders 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 Flow Traders BV are associated (or correlated) with AMS Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AMS Small Cap has no effect on the direction of Flow Traders i.e., Flow Traders and AMS Small go up and down completely randomly.
Pair Corralation between Flow Traders and AMS Small
Assuming the 90 days trading horizon Flow Traders BV is expected to generate 1.96 times more return on investment than AMS Small. However, Flow Traders is 1.96 times more volatile than AMS Small Cap. It trades about 0.01 of its potential returns per unit of risk. AMS Small Cap is currently generating about -0.01 per unit of risk. If you would invest 2,093 in Flow Traders BV on August 25, 2024 and sell it today you would earn a total of 45.00 from holding Flow Traders BV or generate 2.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
Flow Traders BV vs. AMS Small Cap
Performance |
| Timeline |
Flow Traders and AMS Small Volatility Contrast
Predicted Return Density |
| Returns |
Flow Traders BV
Pair trading matchups for Flow Traders
AMS Small Cap
Pair trading matchups for AMS Small
Pair Trading with Flow Traders and AMS Small
The main advantage of trading using opposite Flow Traders and AMS Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Flow Traders position performs unexpectedly, AMS Small 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 AMS Small will offset losses from the drop in AMS Small's long position.| Flow Traders vs. NN Group NV | Flow Traders vs. BE Semiconductor Industries | Flow Traders vs. Koninklijke Ahold Delhaize | Flow Traders vs. ASR Nederland NV |
| AMS Small vs. BE Semiconductor Industries | AMS Small vs. Allfunds Group | AMS Small vs. AMG Advanced Metallurgical | AMS Small vs. Flow Traders BV |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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