Correlation Between Marvell Technology and Ams AG

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

By analyzing existing cross correlation between Marvell Technology Group and ams AG, you can compare the effects of market volatilities on Marvell Technology and Ams AG 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 Marvell Technology with a short position of Ams AG. Check out your portfolio center. Please also check ongoing floating volatility patterns of Marvell Technology and Ams AG.

Diversification Opportunities for Marvell Technology and Ams AG

-0.4

Correlation Coefficient

Marvell Technology  Ams AG

Very good diversification

The 3 months correlation between Marvell and Ams is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Marvell Technology Group and ams AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ams AG and Marvell Technology 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 Marvell Technology Group are associated (or correlated) with Ams AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ams AG has no effect on the direction of Marvell Technology i.e., Marvell Technology and Ams AG go up and down completely randomly.

Pair Corralation between Marvell Technology and Ams AG

Given the investment horizon of 90 days Marvell Technology is expected to generate 50.8 times less return on investment than Ams AG. But when comparing it to its historical volatility, Marvell Technology Group is 36.81 times less risky than Ams AG. It trades about 0.12 of its potential returns per unit of risk. ams AG is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  150.00  in ams AG on September 23, 2024 and sell it today you would earn a total of  585.00  from holding ams AG or generate 390.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Marvell Technology Group  vs.  ams AG

Marvell Technology

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Marvell Technology Group are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite quite unsteady basic indicators, Marvell Technology disclosed solid returns over the last few months and may actually be approaching a breakup point.

ams AG

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in ams AG are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Ams AG reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Marvell Technology and Ams AG

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

The idea behind Marvell Technology Group and ams AG 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.