Correlation Between AMG Advanced and Edinburgh Investment

Can any of the company-specific risk be diversified away by investing in both AMG Advanced and Edinburgh Investment 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 Edinburgh Investment 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 Edinburgh Investment Trust, you can compare the effects of market volatilities on AMG Advanced and Edinburgh Investment 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 Edinburgh Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of AMG Advanced and Edinburgh Investment.

Diversification Opportunities for AMG Advanced and Edinburgh Investment

-0.4

Correlation Coefficient

AMG Advanced  Edinburgh Investment

Very good diversification

The 3 months correlation between AMG and Edinburgh is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding AMG Advanced Metallurgical and Edinburgh Investment Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Edinburgh Investment 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 Edinburgh Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Edinburgh Investment has no effect on the direction of AMG Advanced i.e., AMG Advanced and Edinburgh Investment go up and down completely randomly.

Pair Corralation between AMG Advanced and Edinburgh Investment

Assuming the 90 days trading horizon AMG Advanced Metallurgical is expected to under-perform the Edinburgh Investment. In addition to that, AMG Advanced is 3.32 times more volatile than Edinburgh Investment Trust. It trades about -0.05 of its total potential returns per unit of risk. Edinburgh Investment Trust is currently generating about 0.03 per unit of volatility. If you would invest  66,348  in Edinburgh Investment Trust on October 11, 2024 and sell it today you would earn a total of  7,452  from holding Edinburgh Investment Trust or generate 11.23% 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.  Edinburgh Investment Trust

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 February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Edinburgh Investment

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Edinburgh Investment Trust has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Edinburgh Investment is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with AMG Advanced and Edinburgh Investment

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

The idea behind AMG Advanced Metallurgical and Edinburgh Investment Trust 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 Search module to search for actively traded equities including funds and ETFs from over 30 global markets.