Correlation Between Minetech Resources and Amalgamated Industrial

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

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

Diversification Opportunities for Minetech Resources and Amalgamated Industrial

0.44

Correlation Coefficient

Minetech Resources  Amalgamated Industrial

Very weak diversification

The 3 months correlation between Minetech and Amalgamated is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Minetech Resources Bhd and Amalgamated Industrial Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amalgamated Industrial and Minetech Resources 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 Minetech Resources Bhd are associated (or correlated) with Amalgamated Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amalgamated Industrial has no effect on the direction of Minetech Resources i.e., Minetech Resources and Amalgamated Industrial go up and down completely randomly.

Pair Corralation between Minetech Resources and Amalgamated Industrial

Assuming the 90 days trading horizon Minetech Resources Bhd is expected to under-perform the Amalgamated Industrial. But the stock apears to be less risky and, when comparing its historical volatility, Minetech Resources Bhd is 1.39 times less risky than Amalgamated Industrial. The stock trades about -0.13 of its potential returns per unit of risk. The Amalgamated Industrial Steel is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  13.00  in Amalgamated Industrial Steel on November 29, 2024 and sell it today you would lose (1.00) from holding Amalgamated Industrial Steel or give up 7.69% of portfolio value over 90 days.

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

Minetech Resources Bhd  vs.  Amalgamated Industrial Steel

Minetech Resources Bhd

Risk-Adjusted Performance

Very Weak

Over the last 90 days Minetech Resources Bhd has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in March 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Amalgamated Industrial

Risk-Adjusted Performance

Very Weak

Over the last 90 days Amalgamated Industrial Steel has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Amalgamated Industrial is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Minetech Resources and Amalgamated Industrial

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

The idea behind Minetech Resources Bhd and Amalgamated Industrial Steel 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.