Correlation Between Ambertech and Centrex Metals

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

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

Diversification Opportunities for Ambertech and Centrex Metals

-0.08

Correlation Coefficient

Ambertech  Centrex Metals

Good diversification

The 3 months correlation between Ambertech and Centrex is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Ambertech and Centrex Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Centrex Metals and Ambertech 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 Ambertech are associated (or correlated) with Centrex Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Centrex Metals has no effect on the direction of Ambertech i.e., Ambertech and Centrex Metals go up and down completely randomly.

Pair Corralation between Ambertech and Centrex Metals

Assuming the 90 days trading horizon Ambertech is expected to generate 1.67 times more return on investment than Centrex Metals. However, Ambertech is 1.67 times more volatile than Centrex Metals. It trades about 0.04 of its potential returns per unit of risk. Centrex Metals is currently generating about 0.01 per unit of risk. If you would invest  16.00  in Ambertech on December 23, 2024 and sell it today you would earn a total of  1.00  from holding Ambertech or generate 6.25% return on investment over 90 days.

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

Ambertech  vs.  Centrex Metals

Ambertech

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Ambertech are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Ambertech unveiled solid returns over the last few months and may actually be approaching a breakup point.

Centrex Metals

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Centrex Metals are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable primary indicators, Centrex Metals is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Ambertech and Centrex Metals

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

The idea behind Ambertech and Centrex Metals 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.