Correlation Between AMG Advanced and Empire Metals

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

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

Diversification Opportunities for AMG Advanced and Empire Metals

0.53

Correlation Coefficient

AMG Advanced  Empire Metals

Very weak diversification

The 3 months correlation between AMG and Empire is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding AMG Advanced Metallurgical and Empire Metals Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Empire Metals Limited and AMG Advanced 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 AMG Advanced Metallurgical are associated (or correlated) with Empire Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Empire Metals Limited has no effect on the direction of AMG Advanced i.e., AMG Advanced and Empire Metals go up and down completely randomly.

Pair Corralation between AMG Advanced and Empire Metals

Assuming the 90 days trading horizon AMG Advanced Metallurgical is expected to generate 0.73 times more return on investment than Empire Metals. However, AMG Advanced Metallurgical is 1.37 times less risky than Empire Metals. It trades about -0.03 of its potential returns per unit of risk. Empire Metals Limited is currently generating about -0.07 per unit of risk. If you would invest  1,696  in AMG Advanced Metallurgical on September 12, 2024 and sell it today you would lose (215.00) from holding AMG Advanced Metallurgical or give up 12.68% of portfolio value over 90 days.

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

AMG Advanced Metallurgical  vs.  Empire Metals Limited

AMG Advanced Metallu

Risk-Adjusted Performance

2 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in AMG Advanced Metallurgical are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, AMG Advanced is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Empire Metals Limited

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Empire Metals Limited are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, Empire Metals is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with AMG Advanced and Empire Metals

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

The idea behind AMG Advanced Metallurgical and Empire Metals Limited 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.