Correlation Between Apple and AMG Advanced

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

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

Diversification Opportunities for Apple and AMG Advanced

-0.07

Correlation Coefficient

Apple  AMG Advanced

Good diversification

The 3 months correlation between Apple and AMG is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc 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 Apple 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 Apple Inc 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 Apple i.e., Apple and AMG Advanced go up and down completely randomly.

Pair Corralation between Apple and AMG Advanced

Assuming the 90 days trading horizon Apple is expected to generate 1.16 times less return on investment than AMG Advanced. But when comparing it to its historical volatility, Apple Inc is 1.67 times less risky than AMG Advanced. It trades about 0.06 of its potential returns per unit of risk. AMG Advanced Metallurgical is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  1,990  in AMG Advanced Metallurgical on February 26, 2024 and sell it today you would earn a total of  92.00  from holding AMG Advanced Metallurgical or generate 4.62% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

Apple Inc  vs.  AMG Advanced Metallurgical

Apple Inc

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Apple Inc are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable fundamental indicators, Apple is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

AMG Advanced Metallu

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in AMG Advanced Metallurgical are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, AMG Advanced may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Pair Trading with Apple and AMG Advanced

The main advantage of trading using opposite Apple and AMG Advanced positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Apple 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 Apple Inc 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.