Correlation Between Amanet Management and YH Dimri

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

By analyzing existing cross correlation between Amanet Management Systems and YH Dimri Construction, you can compare the effects of market volatilities on Amanet Management and YH Dimri 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 Amanet Management with a short position of YH Dimri. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amanet Management and YH Dimri.

Diversification Opportunities for Amanet Management and YH Dimri

0.68

Correlation Coefficient

Amanet Management  YH Dimri

Poor diversification

The 3 months correlation between Amanet and DIMRI is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Amanet Management Systems and YH Dimri Construction in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on YH Dimri Construction and Amanet Management 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 Amanet Management Systems are associated (or correlated) with YH Dimri. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of YH Dimri Construction has no effect on the direction of Amanet Management i.e., Amanet Management and YH Dimri go up and down completely randomly.

Pair Corralation between Amanet Management and YH Dimri

Assuming the 90 days trading horizon Amanet Management is expected to generate 3.02 times less return on investment than YH Dimri. But when comparing it to its historical volatility, Amanet Management Systems is 1.04 times less risky than YH Dimri. It trades about 0.06 of its potential returns per unit of risk. YH Dimri Construction is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  3,198,000  in YH Dimri Construction on September 14, 2024 and sell it today you would earn a total of  421,000  from holding YH Dimri Construction or generate 13.16% return on investment over 90 days.

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

Amanet Management Systems  vs.  YH Dimri Construction

Amanet Management Systems

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Amanet Management Systems are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Amanet Management is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

YH Dimri Construction

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in YH Dimri Construction are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, YH Dimri unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Amanet Management and YH Dimri

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

The idea behind Amanet Management Systems and YH Dimri Construction 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.