Correlation Between Mystate and Ambertech

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

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

Diversification Opportunities for Mystate and Ambertech

-0.75

Correlation Coefficient

Mystate  Ambertech

Pay attention - limited upside

The 3 months correlation between Mystate and Ambertech is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding Mystate and Ambertech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ambertech and Mystate 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 Mystate are associated (or correlated) with Ambertech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ambertech has no effect on the direction of Mystate i.e., Mystate and Ambertech go up and down completely randomly.

Pair Corralation between Mystate and Ambertech

Assuming the 90 days trading horizon Mystate is expected to generate 0.35 times more return on investment than Ambertech. However, Mystate is 2.83 times less risky than Ambertech. It trades about 0.04 of its potential returns per unit of risk. Ambertech is currently generating about -0.01 per unit of risk. If you would invest  357.00  in Mystate on October 4, 2024 and sell it today you would earn a total of  89.00  from holding Mystate or generate 24.93% return on investment over 90 days.

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

Mystate  vs.  Ambertech

Mystate

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Mystate are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Mystate unveiled solid returns over the last few months and may actually be approaching a breakup point.

Ambertech

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ambertech has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Mystate and Ambertech

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

The idea behind Mystate and Ambertech 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.