Correlation Between Rohm Co and Ams AG
Can any of the company-specific risk be diversified away by investing in both Rohm Co and Ams AG 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 Rohm Co and Ams AG into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Rohm Co Ltd and ams AG, you can compare the effects of market volatilities on Rohm Co and Ams AG 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 Rohm Co with a short position of Ams AG. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rohm Co and Ams AG.
Diversification Opportunities for Rohm Co and Ams AG
Good diversification
The 3 months correlation between Rohm and Ams is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Rohm Co Ltd and ams AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ams AG and Rohm Co 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 Rohm Co Ltd are associated (or correlated) with Ams AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ams AG has no effect on the direction of Rohm Co i.e., Rohm Co and Ams AG go up and down completely randomly.
Pair Corralation between Rohm Co and Ams AG
Assuming the 90 days horizon Rohm Co Ltd is expected to generate 0.37 times more return on investment than Ams AG. However, Rohm Co Ltd is 2.72 times less risky than Ams AG. It trades about -0.26 of its potential returns per unit of risk. ams AG is currently generating about -0.26 per unit of risk. If you would invest 1,110 in Rohm Co Ltd on August 29, 2024 and sell it today you would lose (160.00) from holding Rohm Co Ltd or give up 14.41% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Rohm Co Ltd vs. ams AG
Performance |
| Timeline |
| Rohm Co |
| ams AG |
Rohm Co and Ams AG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Rohm Co and Ams AG
The main advantage of trading using opposite Rohm Co and Ams AG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rohm Co position performs unexpectedly, Ams AG 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 AG will offset losses from the drop in Ams AG's long position.| Rohm Co vs. Renesas Electronics | Rohm Co vs. Power Integrations | Rohm Co vs. MACOM Technology Solutions | Rohm Co vs. Renesas Electronics Corp |
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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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