Correlation Between AMG Advanced and Ajax Resources

Can any of the company-specific risk be diversified away by investing in both AMG Advanced and Ajax Resources 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 AMG Advanced and Ajax Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between AMG Advanced Metallurgical and Ajax Resources PLC, you can compare the effects of market volatilities on AMG Advanced and Ajax Resources 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 AMG Advanced with a short position of Ajax Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of AMG Advanced and Ajax Resources.

Diversification Opportunities for AMG Advanced and Ajax Resources

-0.46

Correlation Coefficient

AMG Advanced  Ajax Resources

Very good diversification

The 3 months correlation between AMG and Ajax is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding AMG Advanced Metallurgical and Ajax Resources PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ajax Resources PLC and AMG Advanced 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 AMG Advanced Metallurgical are associated (or correlated) with Ajax Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ajax Resources PLC has no effect on the direction of AMG Advanced i.e., AMG Advanced and Ajax Resources go up and down completely randomly.

Pair Corralation between AMG Advanced and Ajax Resources

Assuming the 90 days trading horizon AMG Advanced Metallurgical is expected to under-perform the Ajax Resources. In addition to that, AMG Advanced is 2.03 times more volatile than Ajax Resources PLC. It trades about -0.09 of its total potential returns per unit of risk. Ajax Resources PLC is currently generating about 0.12 per unit of volatility. If you would invest  275.00  in Ajax Resources PLC on September 18, 2024 and sell it today you would earn a total of  25.00  from holding Ajax Resources PLC or generate 9.09% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

AMG Advanced Metallurgical  vs.  Ajax Resources PLC

AMG Advanced Metallu

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AMG Advanced Metallurgical has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Ajax Resources PLC

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Ajax Resources PLC are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Ajax Resources may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with AMG Advanced and Ajax Resources

The main advantage of trading using opposite AMG Advanced and Ajax Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AMG Advanced position performs unexpectedly, Ajax Resources 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 Ajax Resources will offset losses from the drop in Ajax Resources' long position.

The idea behind AMG Advanced Metallurgical and Ajax Resources PLC 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.

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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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.