Correlation Between Ampleforth and Mining Global

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

By analyzing existing cross correlation between Ampleforth and Mining Global, you can compare the effects of market volatilities on Ampleforth and Mining Global 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 Ampleforth with a short position of Mining Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ampleforth and Mining Global.

Diversification Opportunities for Ampleforth and Mining Global

-0.09

Correlation Coefficient

Ampleforth  Mining Global

Good diversification

The 3 months correlation between Ampleforth and Mining is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Ampleforth and Mining Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mining Global and Ampleforth 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 Ampleforth are associated (or correlated) with Mining Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mining Global has no effect on the direction of Ampleforth i.e., Ampleforth and Mining Global go up and down completely randomly.

Pair Corralation between Ampleforth and Mining Global

Assuming the 90 days trading horizon Ampleforth is expected to generate 18.82 times less return on investment than Mining Global. But when comparing it to its historical volatility, Ampleforth is 22.48 times less risky than Mining Global. It trades about 0.12 of its potential returns per unit of risk. Mining Global is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  0.01  in Mining Global on September 5, 2024 and sell it today you would lose (0.01) from holding Mining Global or give up 100.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	96.92%
Values	Daily Returns

Ampleforth  vs.  Mining Global

Ampleforth

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Ampleforth are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, Ampleforth exhibited solid returns over the last few months and may actually be approaching a breakup point.

Mining Global

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Mining Global are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak technical and fundamental indicators, Mining Global reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ampleforth and Mining Global

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

The idea behind Ampleforth and Mining Global 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.