Correlation Between AMG Advanced and Metals X

Can any of the company-specific risk be diversified away by investing in both AMG Advanced and Metals X 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 Metals X 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 Metals X Limited, you can compare the effects of market volatilities on AMG Advanced and Metals X 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 Metals X. Check out your portfolio center. Please also check ongoing floating volatility patterns of AMG Advanced and Metals X.

Diversification Opportunities for AMG Advanced and Metals X

0.8

Correlation Coefficient

AMG Advanced  Metals X

Very poor diversification

The 3 months correlation between AMG and Metals is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding AMG Advanced Metallurgical and Metals X Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Metals X Limited 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 Metals X. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Metals X Limited has no effect on the direction of AMG Advanced i.e., AMG Advanced and Metals X go up and down completely randomly.

Pair Corralation between AMG Advanced and Metals X

Assuming the 90 days horizon AMG Advanced is expected to generate 2.16 times less return on investment than Metals X. But when comparing it to its historical volatility, AMG Advanced Metallurgical is 1.3 times less risky than Metals X. It trades about 0.1 of its potential returns per unit of risk. Metals X Limited is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  23.00  in Metals X Limited on December 28, 2024 and sell it today you would earn a total of  19.00  from holding Metals X Limited or generate 82.61% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	91.8%
Values	Daily Returns

AMG Advanced Metallurgical  vs.  Metals X Limited

AMG Advanced Metallu

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in AMG Advanced Metallurgical are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile primary indicators, AMG Advanced reported solid returns over the last few months and may actually be approaching a breakup point.

Metals X Limited

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Metals X Limited are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, Metals X reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with AMG Advanced and Metals X

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

The idea behind AMG Advanced Metallurgical and Metals X Limited 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.