Correlation Between FSA and AMP
Can any of the company-specific risk be diversified away by investing in both FSA and AMP 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 FSA and AMP into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FSA Group and AMP, you can compare the effects of market volatilities on FSA and AMP 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 FSA with a short position of AMP. Check out your portfolio center. Please also check ongoing floating volatility patterns of FSA and AMP.
Diversification Opportunities for FSA and AMP
Excellent diversification
The 3 months correlation between FSA and AMP is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding FSA Group and AMP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AMP and FSA 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 FSA Group are associated (or correlated) with AMP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AMP has no effect on the direction of FSA i.e., FSA and AMP go up and down completely randomly.
Pair Corralation between FSA and AMP
Assuming the 90 days trading horizon FSA Group is expected to under-perform the AMP. But the stock apears to be less risky and, when comparing its historical volatility, FSA Group is 1.54 times less risky than AMP. The stock trades about -0.01 of its potential returns per unit of risk. The AMP is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 126.00 in AMP on August 30, 2024 and sell it today you would earn a total of 30.00 from holding AMP or generate 23.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
FSA Group vs. AMP
Performance |
| Timeline |
| FSA Group |
| AMP |
FSA and AMP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FSA and AMP
The main advantage of trading using opposite FSA and AMP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FSA position performs unexpectedly, AMP 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 AMP will offset losses from the drop in AMP's long position.| FSA vs. Aneka Tambang Tbk | FSA vs. Commonwealth Bank of | FSA vs. Australia and New | FSA vs. ANZ Group Holdings |
| AMP vs. Aneka Tambang Tbk | AMP vs. Commonwealth Bank of | AMP vs. Australia and New | AMP vs. ANZ Group Holdings |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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