Correlation Between AMG Advanced and Ebusco Holding

Can any of the company-specific risk be diversified away by investing in both AMG Advanced and Ebusco Holding 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 AMG Advanced and Ebusco Holding into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between AMG Advanced Metallurgical and Ebusco Holding BV, you can compare the effects of market volatilities on AMG Advanced and Ebusco Holding 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 AMG Advanced with a short position of Ebusco Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of AMG Advanced and Ebusco Holding.

Diversification Opportunities for AMG Advanced and Ebusco Holding

0.53

Correlation Coefficient

AMG Advanced  Ebusco Holding

Very weak diversification

The 3 months correlation between AMG and Ebusco is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding AMG Advanced Metallurgical and Ebusco Holding BV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ebusco Holding BV and AMG Advanced 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 AMG Advanced Metallurgical are associated (or correlated) with Ebusco Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ebusco Holding BV has no effect on the direction of AMG Advanced i.e., AMG Advanced and Ebusco Holding go up and down completely randomly.

Pair Corralation between AMG Advanced and Ebusco Holding

Assuming the 90 days trading horizon AMG Advanced Metallurgical is expected to generate 0.56 times more return on investment than Ebusco Holding. However, AMG Advanced Metallurgical is 1.78 times less risky than Ebusco Holding. It trades about 0.28 of its potential returns per unit of risk. Ebusco Holding BV is currently generating about -0.14 per unit of risk. If you would invest  1,361  in AMG Advanced Metallurgical on October 24, 2024 and sell it today you would earn a total of  162.00  from holding AMG Advanced Metallurgical or generate 11.9% return on investment over 90 days.

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

AMG Advanced Metallurgical  vs.  Ebusco Holding BV

AMG Advanced Metallu

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AMG Advanced Metallurgical has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable technical and fundamental indicators, AMG Advanced is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Ebusco Holding BV

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ebusco Holding BV has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with AMG Advanced and Ebusco Holding

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

The idea behind AMG Advanced Metallurgical and Ebusco Holding BV 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.