Correlation Between AMAG Austria and Este Lauder

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

Diversification Opportunities for AMAG Austria and Este Lauder

0.07
  Correlation Coefficient

Significant diversification

The 3 months correlation between AMAG and Este is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding AMAG Austria Metall and The Este Lauder in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Este Lauder and AMAG Austria 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 AMAG Austria Metall are associated (or correlated) with Este Lauder. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Este Lauder has no effect on the direction of AMAG Austria i.e., AMAG Austria and Este Lauder go up and down completely randomly.

Pair Corralation between AMAG Austria and Este Lauder

Assuming the 90 days trading horizon AMAG Austria Metall is expected to generate 0.34 times more return on investment than Este Lauder. However, AMAG Austria Metall is 2.96 times less risky than Este Lauder. It trades about 0.05 of its potential returns per unit of risk. The Este Lauder is currently generating about -0.09 per unit of risk. If you would invest  2,360  in AMAG Austria Metall on September 29, 2024 and sell it today you would earn a total of  80.00  from holding AMAG Austria Metall or generate 3.39% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

AMAG Austria Metall  vs.  The Este Lauder

 Performance 
       Timeline  
AMAG Austria Metall 

Risk-Adjusted Performance

4 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in AMAG Austria Metall are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong forward indicators, AMAG Austria is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.
Este Lauder 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days The Este Lauder has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent performance in the last few months, the Stock's forward indicators remain fairly strong which may send shares a bit higher in January 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

AMAG Austria and Este Lauder Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with AMAG Austria and Este Lauder

The main advantage of trading using opposite AMAG Austria and Este Lauder positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AMAG Austria position performs unexpectedly, Este Lauder 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 Este Lauder will offset losses from the drop in Este Lauder's long position.
The idea behind AMAG Austria Metall and The Este Lauder 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.

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