Correlation Between AIM Industrial and Amata Public

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

By analyzing existing cross correlation between AIM Industrial Growth and Amata Public, you can compare the effects of market volatilities on AIM Industrial and Amata Public 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 AIM Industrial with a short position of Amata Public. Check out your portfolio center. Please also check ongoing floating volatility patterns of AIM Industrial and Amata Public.

Diversification Opportunities for AIM Industrial and Amata Public

-0.27

Correlation Coefficient

AIM Industrial  Amata Public

Very good diversification

The 3 months correlation between AIM and Amata is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding AIM Industrial Growth and Amata Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amata Public and AIM 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 AIM Industrial Growth are associated (or correlated) with Amata Public. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amata Public has no effect on the direction of AIM Industrial i.e., AIM Industrial and Amata Public go up and down completely randomly.

Pair Corralation between AIM Industrial and Amata Public

Assuming the 90 days trading horizon AIM Industrial Growth is expected to under-perform the Amata Public. But the stock apears to be less risky and, when comparing its historical volatility, AIM Industrial Growth is 2.88 times less risky than Amata Public. The stock trades about -0.01 of its potential returns per unit of risk. The Amata Public is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  2,270  in Amata Public on October 26, 2024 and sell it today you would earn a total of  355.00  from holding Amata Public or generate 15.64% return on investment over 90 days.

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

AIM Industrial Growth  vs.  Amata Public

AIM Industrial Growth

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AIM Industrial Growth has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong primary indicators, AIM Industrial is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Amata Public

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Amata Public are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Even with relatively conflicting basic indicators, Amata Public reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with AIM Industrial and Amata Public

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

The idea behind AIM Industrial Growth and Amata Public 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.

Check out your portfolio center.

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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.