Correlation Between Amg River and Technology Communications

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

By analyzing existing cross correlation between Amg River Road and Technology Munications Portfolio, you can compare the effects of market volatilities on Amg River and Technology Communications 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 River with a short position of Technology Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amg River and Technology Communications.

Diversification Opportunities for Amg River and Technology Communications

0.88

Correlation Coefficient

Amg River  Technology Communications

Very poor diversification

The 3 months correlation between Amg and Technology is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Amg River Road and Technology Munications Portfol in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Technology Communications and Amg River 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 River Road are associated (or correlated) with Technology Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Technology Communications has no effect on the direction of Amg River i.e., Amg River and Technology Communications go up and down completely randomly.

Pair Corralation between Amg River and Technology Communications

Assuming the 90 days horizon Amg River Road is expected to generate 0.95 times more return on investment than Technology Communications. However, Amg River Road is 1.05 times less risky than Technology Communications. It trades about 0.24 of its potential returns per unit of risk. Technology Munications Portfolio is currently generating about 0.17 per unit of risk. If you would invest  976.00  in Amg River Road on August 31, 2024 and sell it today you would earn a total of  145.00  from holding Amg River Road or generate 14.86% return on investment over 90 days.

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

Amg River Road  vs.  Technology Munications Portfol

Amg River Road

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Amg River Road are ranked lower than 18 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak primary indicators, Amg River showed solid returns over the last few months and may actually be approaching a breakup point.

Technology Communications

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Technology Munications Portfolio are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Technology Communications may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with Amg River and Technology Communications

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

The idea behind Amg River Road and Technology Munications Portfolio 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.