Correlation Between Ambrus Core and Alger Health

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

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

Diversification Opportunities for Ambrus Core and Alger Health

0.2

Correlation Coefficient

Ambrus Core  Alger Health

Modest diversification

The 3 months correlation between Ambrus and Alger is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Ambrus Core Bond and Alger Health Sciences in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alger Health Sciences and Ambrus Core 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 Ambrus Core Bond are associated (or correlated) with Alger Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alger Health Sciences has no effect on the direction of Ambrus Core i.e., Ambrus Core and Alger Health go up and down completely randomly.

Pair Corralation between Ambrus Core and Alger Health

Assuming the 90 days horizon Ambrus Core Bond is expected to under-perform the Alger Health. But the mutual fund apears to be less risky and, when comparing its historical volatility, Ambrus Core Bond is 4.26 times less risky than Alger Health. The mutual fund trades about -0.01 of its potential returns per unit of risk. The Alger Health Sciences is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  1,360  in Alger Health Sciences on August 31, 2024 and sell it today you would earn a total of  5.00  from holding Alger Health Sciences or generate 0.37% return on investment over 90 days.

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

Ambrus Core Bond  vs.  Alger Health Sciences

Ambrus Core Bond

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ambrus Core Bond has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong fundamental drivers, Ambrus Core is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Alger Health Sciences

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Alger Health Sciences has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong fundamental indicators, Alger Health is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Ambrus Core and Alger Health

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

The idea behind Ambrus Core Bond and Alger Health Sciences 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.

Check out your portfolio center.

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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.