Correlation Between AMG Advanced and Sherritt International

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

Diversification Opportunities for AMG Advanced and Sherritt International

-0.62

Correlation Coefficient

AMG Advanced  Sherritt International

Excellent diversification

The 3 months correlation between AMG and Sherritt is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding AMG Advanced Metallurgical and Sherritt International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sherritt International 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 Sherritt International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sherritt International has no effect on the direction of AMG Advanced i.e., AMG Advanced and Sherritt International go up and down completely randomly.

Pair Corralation between AMG Advanced and Sherritt International

Assuming the 90 days horizon AMG Advanced Metallurgical is expected to generate 0.97 times more return on investment than Sherritt International. However, AMG Advanced Metallurgical is 1.03 times less risky than Sherritt International. It trades about 0.06 of its potential returns per unit of risk. Sherritt International is currently generating about 0.0 per unit of risk. If you would invest  1,500  in AMG Advanced Metallurgical on December 29, 2024 and sell it today you would earn a total of  184.00  from holding AMG Advanced Metallurgical or generate 12.27% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	93.44%
Values	Daily Returns

AMG Advanced Metallurgical  vs.  Sherritt International

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 4 (%) 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.

Sherritt International

Risk-Adjusted Performance

Very Weak

Over the last 90 days Sherritt International has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Sherritt International is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with AMG Advanced and Sherritt International

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

The idea behind AMG Advanced Metallurgical and Sherritt International 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.