Correlation Between ABC Arbitrage and Amatheon Agri

Can any of the company-specific risk be diversified away by investing in both ABC Arbitrage and Amatheon Agri 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 ABC Arbitrage and Amatheon Agri into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between ABC arbitrage SA and Amatheon Agri Holding, you can compare the effects of market volatilities on ABC Arbitrage and Amatheon Agri 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 ABC Arbitrage with a short position of Amatheon Agri. Check out your portfolio center. Please also check ongoing floating volatility patterns of ABC Arbitrage and Amatheon Agri.

Diversification Opportunities for ABC Arbitrage and Amatheon Agri

-0.66

Correlation Coefficient

ABC Arbitrage  Amatheon Agri

Excellent diversification

The 3 months correlation between ABC and Amatheon is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding ABC arbitrage SA and Amatheon Agri Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amatheon Agri Holding and ABC Arbitrage 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 ABC arbitrage SA are associated (or correlated) with Amatheon Agri. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amatheon Agri Holding has no effect on the direction of ABC Arbitrage i.e., ABC Arbitrage and Amatheon Agri go up and down completely randomly.

Pair Corralation between ABC Arbitrage and Amatheon Agri

Assuming the 90 days trading horizon ABC Arbitrage is expected to generate 13.28 times less return on investment than Amatheon Agri. But when comparing it to its historical volatility, ABC arbitrage SA is 14.42 times less risky than Amatheon Agri. It trades about 0.05 of its potential returns per unit of risk. Amatheon Agri Holding is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  2.00  in Amatheon Agri Holding on September 23, 2024 and sell it today you would lose (0.15) from holding Amatheon Agri Holding or give up 7.5% of portfolio value over 90 days.

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

ABC arbitrage SA  vs.  Amatheon Agri Holding

ABC arbitrage SA

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in ABC arbitrage SA are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, ABC Arbitrage may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Amatheon Agri Holding

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Amatheon Agri Holding has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest weak performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Pair Trading with ABC Arbitrage and Amatheon Agri

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

The idea behind ABC arbitrage SA and Amatheon Agri Holding 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.