Correlation Between AMC Networks and Altice USA

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Can any of the company-specific risk be diversified away by investing in both AMC Networks and Altice USA 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 AMC Networks and Altice USA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AMC Networks and Altice USA, you can compare the effects of market volatilities on AMC Networks and Altice USA 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 AMC Networks with a short position of Altice USA. Check out your portfolio center. Please also check ongoing floating volatility patterns of AMC Networks and Altice USA.

Diversification Opportunities for AMC Networks and Altice USA

0.23
  Correlation Coefficient

Modest diversification

The 3 months correlation between AMC and Altice is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding AMC Networks and Altice USA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Altice USA and AMC Networks 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 AMC Networks are associated (or correlated) with Altice USA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Altice USA has no effect on the direction of AMC Networks i.e., AMC Networks and Altice USA go up and down completely randomly.

Pair Corralation between AMC Networks and Altice USA

Given the investment horizon of 90 days AMC Networks is expected to under-perform the Altice USA. But the stock apears to be less risky and, when comparing its historical volatility, AMC Networks is 1.55 times less risky than Altice USA. The stock trades about -0.02 of its potential returns per unit of risk. The Altice USA is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  325.00  in Altice USA on December 29, 2023 and sell it today you would lose (64.00) from holding Altice USA or give up 19.69% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

AMC Networks  vs.  Altice USA

 Performance 
       Timeline  
AMC Networks 

Risk-Adjusted Performance

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Very Weak
Over the last 90 days AMC Networks has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's fundamental indicators remain fairly strong which may send shares a bit higher in April 2024. The current disturbance may also be a sign of long term up-swing for the company investors.
Altice USA 

Risk-Adjusted Performance

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Low
 
High
Very Weak
Over the last 90 days Altice USA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal 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.

AMC Networks and Altice USA Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with AMC Networks and Altice USA

The main advantage of trading using opposite AMC Networks and Altice USA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AMC Networks position performs unexpectedly, Altice USA 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 Altice USA will offset losses from the drop in Altice USA's long position.
The idea behind AMC Networks and Altice USA 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..

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