Correlation Between Amata Summit and AIM Industrial

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

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

Diversification Opportunities for Amata Summit and AIM Industrial

0.63

Correlation Coefficient

Amata Summit  AIM Industrial

Poor diversification

The 3 months correlation between Amata and AIM is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Amata Summit Growth and AIM Industrial Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AIM Industrial Growth and Amata Summit 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 Amata Summit Growth are associated (or correlated) with AIM Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AIM Industrial Growth has no effect on the direction of Amata Summit i.e., Amata Summit and AIM Industrial go up and down completely randomly.

Pair Corralation between Amata Summit and AIM Industrial

Assuming the 90 days trading horizon Amata Summit Growth is expected to generate 1.24 times more return on investment than AIM Industrial. However, Amata Summit is 1.24 times more volatile than AIM Industrial Growth. It trades about 0.14 of its potential returns per unit of risk. AIM Industrial Growth is currently generating about 0.06 per unit of risk. If you would invest  610.00  in Amata Summit Growth on September 3, 2024 and sell it today you would earn a total of  55.00  from holding Amata Summit Growth or generate 9.02% return on investment over 90 days.

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

Amata Summit Growth  vs.  AIM Industrial Growth

Amata Summit Growth

Risk-Adjusted Performance

10 of 100

OK

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

AIM Industrial Growth

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in AIM Industrial Growth are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. 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.

Pair Trading with Amata Summit and AIM Industrial

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

The idea behind Amata Summit Growth and AIM Industrial Growth 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.