Correlation Between AMG Advanced and CVC Capital

Can any of the company-specific risk be diversified away by investing in both AMG Advanced and CVC Capital 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 CVC Capital 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 CVC Capital Partners, you can compare the effects of market volatilities on AMG Advanced and CVC Capital 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 CVC Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of AMG Advanced and CVC Capital.

Diversification Opportunities for AMG Advanced and CVC Capital

-0.76

Correlation Coefficient

AMG Advanced  CVC Capital

Pay attention - limited upside

The 3 months correlation between AMG and CVC is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding AMG Advanced Metallurgical and CVC Capital Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CVC Capital Partners 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 CVC Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CVC Capital Partners has no effect on the direction of AMG Advanced i.e., AMG Advanced and CVC Capital go up and down completely randomly.

Pair Corralation between AMG Advanced and CVC Capital

Assuming the 90 days trading horizon AMG Advanced Metallurgical is expected to under-perform the CVC Capital. But the stock apears to be less risky and, when comparing its historical volatility, AMG Advanced Metallurgical is 1.54 times less risky than CVC Capital. The stock trades about -0.31 of its potential returns per unit of risk. The CVC Capital Partners is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  2,143  in CVC Capital Partners on September 19, 2024 and sell it today you would earn a total of  37.00  from holding CVC Capital Partners or generate 1.73% return on investment over 90 days.

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

AMG Advanced Metallurgical  vs.  CVC Capital Partners

AMG Advanced Metallu

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AMG Advanced Metallurgical has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's technical and fundamental indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

CVC Capital Partners

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in CVC Capital Partners are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain fundamental indicators, CVC Capital may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with AMG Advanced and CVC Capital

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

The idea behind AMG Advanced Metallurgical and CVC Capital Partners 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..