Correlation Between Amalgamated Industrial and Eonmetall Group

Can any of the company-specific risk be diversified away by investing in both Amalgamated Industrial and Eonmetall Group 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 Amalgamated Industrial and Eonmetall Group into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Amalgamated Industrial Steel and Eonmetall Group Bhd, you can compare the effects of market volatilities on Amalgamated Industrial and Eonmetall Group 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 Amalgamated Industrial with a short position of Eonmetall Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amalgamated Industrial and Eonmetall Group.

Diversification Opportunities for Amalgamated Industrial and Eonmetall Group

-0.02

Correlation Coefficient

Amalgamated Industrial  Eonmetall Group

Good diversification

The 3 months correlation between Amalgamated and Eonmetall is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Amalgamated Industrial Steel and Eonmetall Group Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eonmetall Group Bhd and Amalgamated Industrial 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 Amalgamated Industrial Steel are associated (or correlated) with Eonmetall Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eonmetall Group Bhd has no effect on the direction of Amalgamated Industrial i.e., Amalgamated Industrial and Eonmetall Group go up and down completely randomly.

Pair Corralation between Amalgamated Industrial and Eonmetall Group

Assuming the 90 days trading horizon Amalgamated Industrial Steel is expected to generate 2.38 times more return on investment than Eonmetall Group. However, Amalgamated Industrial is 2.38 times more volatile than Eonmetall Group Bhd. It trades about 0.02 of its potential returns per unit of risk. Eonmetall Group Bhd is currently generating about -0.06 per unit of risk. If you would invest  14.00  in Amalgamated Industrial Steel on August 31, 2024 and sell it today you would lose (1.00) from holding Amalgamated Industrial Steel or give up 7.14% of portfolio value over 90 days.

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

Amalgamated Industrial Steel  vs.  Eonmetall Group Bhd

Amalgamated Industrial

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Amalgamated Industrial Steel are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, Amalgamated Industrial disclosed solid returns over the last few months and may actually be approaching a breakup point.

Eonmetall Group Bhd

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Eonmetall Group Bhd has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's basic indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with Amalgamated Industrial and Eonmetall Group

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

The idea behind Amalgamated Industrial Steel and Eonmetall Group Bhd 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.