Correlation Between Lavide Holding and AMG Advanced
Can any of the company-specific risk be diversified away by investing in both Lavide Holding 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 Lavide Holding and AMG Advanced into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lavide Holding NV and AMG Advanced Metallurgical, you can compare the effects of market volatilities on Lavide Holding 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 Lavide Holding with a short position of AMG Advanced. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lavide Holding and AMG Advanced.
Diversification Opportunities for Lavide Holding and AMG Advanced
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Lavide and AMG is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Lavide Holding NV 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 Lavide Holding 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 Lavide Holding NV 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 Lavide Holding i.e., Lavide Holding and AMG Advanced go up and down completely randomly.
Pair Corralation between Lavide Holding and AMG Advanced
Assuming the 90 days trading horizon Lavide Holding NV is expected to generate 1.57 times more return on investment than AMG Advanced. However, Lavide Holding is 1.57 times more volatile than AMG Advanced Metallurgical. It trades about -0.15 of its potential returns per unit of risk. AMG Advanced Metallurgical is currently generating about -0.25 per unit of risk. If you would invest 39.00 in Lavide Holding NV on August 30, 2024 and sell it today you would lose (4.00) from holding Lavide Holding NV or give up 10.26% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lavide Holding NV vs. AMG Advanced Metallurgical
Performance |
| Timeline |
| Lavide Holding NV |
| AMG Advanced Metallu |
Lavide Holding and AMG Advanced Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lavide Holding and AMG Advanced
The main advantage of trading using opposite Lavide Holding and AMG Advanced positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lavide Holding 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.The idea behind Lavide Holding NV and AMG Advanced Metallurgical pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| AMG Advanced vs. NN Group NV | AMG Advanced vs. Koninklijke Vopak NV | AMG Advanced vs. BE Semiconductor Industries | AMG Advanced vs. SBM Offshore 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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