Correlation Between AMG Advanced and Cornish Metals

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

Diversification Opportunities for AMG Advanced and Cornish Metals

-0.02

Correlation Coefficient

AMG Advanced  Cornish Metals

Good diversification

The 3 months correlation between AMG and Cornish is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding AMG Advanced Metallurgical and Cornish Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cornish Metals 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 Cornish Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cornish Metals has no effect on the direction of AMG Advanced i.e., AMG Advanced and Cornish Metals go up and down completely randomly.

Pair Corralation between AMG Advanced and Cornish Metals

Assuming the 90 days horizon AMG Advanced Metallurgical is expected to generate 0.76 times more return on investment than Cornish Metals. However, AMG Advanced Metallurgical is 1.32 times less risky than Cornish Metals. It trades about 0.1 of its potential returns per unit of risk. Cornish Metals is currently generating about 0.04 per unit of risk. If you would invest  1,500  in AMG Advanced Metallurgical on December 28, 2024 and sell it today you would earn a total of  400.00  from holding AMG Advanced Metallurgical or generate 26.67% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	93.33%
Values	Daily Returns

AMG Advanced Metallurgical  vs.  Cornish Metals

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.

Cornish Metals

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Cornish Metals are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, Cornish Metals reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with AMG Advanced and Cornish Metals

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

The idea behind AMG Advanced Metallurgical and Cornish 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.

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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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.