Correlation Between AmTrust Financial and SCHMID Group

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

By analyzing existing cross correlation between AmTrust Financial Services and SCHMID Group NV, you can compare the effects of market volatilities on AmTrust Financial and SCHMID 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 AmTrust Financial with a short position of SCHMID Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of AmTrust Financial and SCHMID Group.

Diversification Opportunities for AmTrust Financial and SCHMID Group

0.06

Correlation Coefficient

AmTrust Financial  SCHMID Group

Significant diversification

The 3 months correlation between AmTrust and SCHMID is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding AmTrust Financial Services and SCHMID Group NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SCHMID Group NV and AmTrust Financial 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 AmTrust Financial Services are associated (or correlated) with SCHMID Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SCHMID Group NV has no effect on the direction of AmTrust Financial i.e., AmTrust Financial and SCHMID Group go up and down completely randomly.

Pair Corralation between AmTrust Financial and SCHMID Group

Assuming the 90 days horizon AmTrust Financial is expected to generate 22.43 times less return on investment than SCHMID Group. But when comparing it to its historical volatility, AmTrust Financial Services is 6.98 times less risky than SCHMID Group. It trades about 0.03 of its potential returns per unit of risk. SCHMID Group NV is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  23.00  in SCHMID Group NV on September 29, 2024 and sell it today you would earn a total of  4.00  from holding SCHMID Group NV or generate 17.39% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	31.65%
Values	Daily Returns

AmTrust Financial Services  vs.  SCHMID Group NV

AmTrust Financial

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in AmTrust Financial Services are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable forward indicators, AmTrust Financial is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

SCHMID Group NV

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in SCHMID Group NV are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak fundamental indicators, SCHMID Group showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with AmTrust Financial and SCHMID Group

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

The idea behind AmTrust Financial Services and SCHMID Group NV 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.