Correlation Between Zegona Communications and AMG Advanced
Can any of the company-specific risk be diversified away by investing in both Zegona Communications 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 Zegona Communications and AMG Advanced into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Zegona Communications Plc and AMG Advanced Metallurgical, you can compare the effects of market volatilities on Zegona Communications 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 Zegona Communications with a short position of AMG Advanced. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zegona Communications and AMG Advanced.
Diversification Opportunities for Zegona Communications and AMG Advanced
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Zegona and AMG is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Zegona Communications Plc 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 Zegona Communications 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 Zegona Communications Plc 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 Zegona Communications i.e., Zegona Communications and AMG Advanced go up and down completely randomly.
Pair Corralation between Zegona Communications and AMG Advanced
Assuming the 90 days trading horizon Zegona Communications Plc is expected to generate 1.18 times more return on investment than AMG Advanced. However, Zegona Communications is 1.18 times more volatile than AMG Advanced Metallurgical. It trades about 0.11 of its potential returns per unit of risk. AMG Advanced Metallurgical is currently generating about -0.05 per unit of risk. If you would invest 14,900 in Zegona Communications Plc on September 14, 2024 and sell it today you would earn a total of 17,100 from holding Zegona Communications Plc or generate 114.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Zegona Communications Plc vs. AMG Advanced Metallurgical
Performance |
| Timeline |
| Zegona Communications Plc |
| AMG Advanced Metallu |
Zegona Communications and AMG Advanced Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Zegona Communications and AMG Advanced
The main advantage of trading using opposite Zegona Communications and AMG Advanced positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Zegona Communications 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.| Zegona Communications vs. Vulcan Materials Co | Zegona Communications vs. Cairo Communication SpA | Zegona Communications vs. Orient Telecoms | Zegona Communications vs. Morgan Advanced Materials |
| AMG Advanced vs. Induction Healthcare Group | AMG Advanced vs. Zoom Video Communications | AMG Advanced vs. MyHealthChecked Plc | AMG Advanced vs. United Internet AG |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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