Correlation Between Advantage Solutions and American CuMo

Can any of the company-specific risk be diversified away by investing in both Advantage Solutions and American CuMo 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 Advantage Solutions and American CuMo into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Advantage Solutions and American CuMo Mining, you can compare the effects of market volatilities on Advantage Solutions and American CuMo 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 Advantage Solutions with a short position of American CuMo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Advantage Solutions and American CuMo.

Diversification Opportunities for Advantage Solutions and American CuMo

0.07

Correlation Coefficient

Advantage Solutions  American CuMo

Significant diversification

The 3 months correlation between Advantage and American is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Advantage Solutions and American CuMo Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American CuMo Mining and Advantage Solutions 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 Advantage Solutions are associated (or correlated) with American CuMo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American CuMo Mining has no effect on the direction of Advantage Solutions i.e., Advantage Solutions and American CuMo go up and down completely randomly.

Pair Corralation between Advantage Solutions and American CuMo

Assuming the 90 days horizon Advantage Solutions is expected to generate 2.12 times more return on investment than American CuMo. However, Advantage Solutions is 2.12 times more volatile than American CuMo Mining. It trades about 0.1 of its potential returns per unit of risk. American CuMo Mining is currently generating about -0.03 per unit of risk. If you would invest  2.89  in Advantage Solutions on September 3, 2024 and sell it today you would earn a total of  0.03  from holding Advantage Solutions or generate 1.04% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	90.48%
Values	Daily Returns

Advantage Solutions  vs.  American CuMo Mining

Advantage Solutions

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Advantage Solutions are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Advantage Solutions showed solid returns over the last few months and may actually be approaching a breakup point.

American CuMo Mining

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days American CuMo Mining has generated negative risk-adjusted returns adding no value to investors with long positions. Despite abnormal performance in the last few months, the Stock's fundamental indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Advantage Solutions and American CuMo

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

The idea behind Advantage Solutions and American CuMo Mining 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.