Correlation Between Sky Metals and Ambertech

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

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

Diversification Opportunities for Sky Metals and Ambertech

-0.1

Correlation Coefficient

Sky Metals  Ambertech

Good diversification

The 3 months correlation between Sky and Ambertech is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Sky Metals and Ambertech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ambertech and Sky Metals 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 Sky Metals 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 Sky Metals i.e., Sky Metals and Ambertech go up and down completely randomly.

Pair Corralation between Sky Metals and Ambertech

Assuming the 90 days trading horizon Sky Metals is expected to under-perform the Ambertech. But the stock apears to be less risky and, when comparing its historical volatility, Sky Metals is 1.73 times less risky than Ambertech. The stock trades about -0.1 of its potential returns per unit of risk. The Ambertech is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest  14.00  in Ambertech on October 11, 2024 and sell it today you would earn a total of  2.00  from holding Ambertech or generate 14.29% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.0%
Values	Daily Returns

Sky Metals  vs.  Ambertech

Sky Metals

Risk-Adjusted Performance

6 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Sky Metals are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Sky Metals 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 Sky Metals and Ambertech

The main advantage of trading using opposite Sky Metals and Ambertech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sky Metals 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 Sky Metals 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.