Correlation Between Moneysupermarket and AMG Advanced

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

By analyzing existing cross correlation between MoneysupermarketCom Group PLC and AMG Advanced Metallurgical, you can compare the effects of market volatilities on Moneysupermarket and AMG Advanced 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 Moneysupermarket with a short position of AMG Advanced. Check out your portfolio center. Please also check ongoing floating volatility patterns of Moneysupermarket and AMG Advanced.

Diversification Opportunities for Moneysupermarket and AMG Advanced

0.73

Correlation Coefficient

Moneysupermarket  AMG Advanced

Poor diversification

The 3 months correlation between Moneysupermarket and AMG is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding MoneysupermarketCom Group PLC and AMG Advanced Metallurgical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AMG Advanced Metallu and Moneysupermarket 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 MoneysupermarketCom Group PLC are associated (or correlated) with AMG Advanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AMG Advanced Metallu has no effect on the direction of Moneysupermarket i.e., Moneysupermarket and AMG Advanced go up and down completely randomly.

Pair Corralation between Moneysupermarket and AMG Advanced

Assuming the 90 days trading horizon Moneysupermarket is expected to generate 2.32 times less return on investment than AMG Advanced. But when comparing it to its historical volatility, MoneysupermarketCom Group PLC is 2.73 times less risky than AMG Advanced. It trades about 0.08 of its potential returns per unit of risk. AMG Advanced Metallurgical is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  1,373  in AMG Advanced Metallurgical on December 29, 2024 and sell it today you would earn a total of  190.00  from holding AMG Advanced Metallurgical or generate 13.84% return on investment over 90 days.

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

MoneysupermarketCom Group PLC  vs.  AMG Advanced Metallurgical

MoneysupermarketCom

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in MoneysupermarketCom Group PLC are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Moneysupermarket may actually be approaching a critical reversion point that can send shares even higher in April 2025.

AMG Advanced Metallu

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in AMG Advanced Metallurgical are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, AMG Advanced unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Moneysupermarket and AMG Advanced

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

The idea behind MoneysupermarketCom Group PLC and AMG Advanced Metallurgical 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.