Correlation Between Fine Metal and Amata Public

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

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

Diversification Opportunities for Fine Metal and Amata Public

-0.11

Correlation Coefficient

Fine Metal  Amata Public

Good diversification

The 3 months correlation between Fine and Amata is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Fine Metal Technologies and Amata Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amata Public and Fine Metal 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 Fine Metal Technologies are associated (or correlated) with Amata Public. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amata Public has no effect on the direction of Fine Metal i.e., Fine Metal and Amata Public go up and down completely randomly.

Pair Corralation between Fine Metal and Amata Public

Assuming the 90 days trading horizon Fine Metal Technologies is expected to under-perform the Amata Public. But the stock apears to be less risky and, when comparing its historical volatility, Fine Metal Technologies is 79.26 times less risky than Amata Public. The stock trades about -0.01 of its potential returns per unit of risk. The Amata Public is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  2,270  in Amata Public on September 15, 2024 and sell it today you would earn a total of  0.00  from holding Amata Public or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	93.44%
Values	Daily Returns

Fine Metal Technologies  vs.  Amata Public

Fine Metal Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fine Metal Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Fine Metal is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Amata Public

Risk-Adjusted Performance

0 of 100

OK

Over the last 90 days Amata Public has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively conflicting basic indicators, Amata Public reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Fine Metal and Amata Public

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

The idea behind Fine Metal Technologies and Amata Public 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.