Correlation Between Monks Investment and Amedeo Air

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

By analyzing existing cross correlation between Monks Investment Trust and Amedeo Air Four, you can compare the effects of market volatilities on Monks Investment and Amedeo Air 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 Monks Investment with a short position of Amedeo Air. Check out your portfolio center. Please also check ongoing floating volatility patterns of Monks Investment and Amedeo Air.

Diversification Opportunities for Monks Investment and Amedeo Air

0.69

Correlation Coefficient

Monks Investment  Amedeo Air

Poor diversification

The 3 months correlation between Monks and Amedeo is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Monks Investment Trust and Amedeo Air Four in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amedeo Air Four and Monks Investment 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 Monks Investment Trust are associated (or correlated) with Amedeo Air. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amedeo Air Four has no effect on the direction of Monks Investment i.e., Monks Investment and Amedeo Air go up and down completely randomly.

Pair Corralation between Monks Investment and Amedeo Air

Assuming the 90 days trading horizon Monks Investment is expected to generate 1.58 times less return on investment than Amedeo Air. But when comparing it to its historical volatility, Monks Investment Trust is 1.04 times less risky than Amedeo Air. It trades about 0.16 of its potential returns per unit of risk. Amedeo Air Four is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest  4,948  in Amedeo Air Four on October 22, 2024 and sell it today you would earn a total of  752.00  from holding Amedeo Air Four or generate 15.2% return on investment over 90 days.

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

Monks Investment Trust  vs.  Amedeo Air Four

Monks Investment Trust

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Monks Investment Trust are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Monks Investment may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Amedeo Air Four

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Amedeo Air Four are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Amedeo Air exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Monks Investment and Amedeo Air

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

The idea behind Monks Investment Trust and Amedeo Air Four 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.