Correlation Between Amulaire Thermal and China Metal

Can any of the company-specific risk be diversified away by investing in both Amulaire Thermal and China Metal 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 Amulaire Thermal and China Metal into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Amulaire Thermal Technology and China Metal Products, you can compare the effects of market volatilities on Amulaire Thermal and China Metal 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 Amulaire Thermal with a short position of China Metal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amulaire Thermal and China Metal.

Diversification Opportunities for Amulaire Thermal and China Metal

0.59

Correlation Coefficient

Amulaire Thermal  China Metal

Very weak diversification

The 3 months correlation between Amulaire and China is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Amulaire Thermal Technology and China Metal Products in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Metal Products and Amulaire Thermal 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 Amulaire Thermal Technology are associated (or correlated) with China Metal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Metal Products has no effect on the direction of Amulaire Thermal i.e., Amulaire Thermal and China Metal go up and down completely randomly.

Pair Corralation between Amulaire Thermal and China Metal

Assuming the 90 days trading horizon Amulaire Thermal Technology is expected to generate 1.62 times more return on investment than China Metal. However, Amulaire Thermal is 1.62 times more volatile than China Metal Products. It trades about -0.09 of its potential returns per unit of risk. China Metal Products is currently generating about -0.16 per unit of risk. If you would invest  3,280  in Amulaire Thermal Technology on September 16, 2024 and sell it today you would lose (520.00) from holding Amulaire Thermal Technology or give up 15.85% of portfolio value over 90 days.

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

Amulaire Thermal Technology  vs.  China Metal Products

Amulaire Thermal Tec

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Amulaire Thermal Technology has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

China Metal Products

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days China Metal Products has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Amulaire Thermal and China Metal

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

The idea behind Amulaire Thermal Technology and China Metal Products 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.