Correlation Between Saga Communications and AMC Networks

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

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

Diversification Opportunities for Saga Communications and AMC Networks

-0.4

Correlation Coefficient

Saga Communications  AMC Networks

Very good diversification

The 3 months correlation between Saga and AMC is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Saga Communications and AMC Networks in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AMC Networks and Saga Communications 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 Saga Communications are associated (or correlated) with AMC Networks. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AMC Networks has no effect on the direction of Saga Communications i.e., Saga Communications and AMC Networks go up and down completely randomly.

Pair Corralation between Saga Communications and AMC Networks

Considering the 90-day investment horizon Saga Communications is expected to under-perform the AMC Networks. But the stock apears to be less risky and, when comparing its historical volatility, Saga Communications is 2.24 times less risky than AMC Networks. The stock trades about -0.1 of its potential returns per unit of risk. The AMC Networks is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  985.00  in AMC Networks on September 2, 2024 and sell it today you would lose (43.00) from holding AMC Networks or give up 4.37% of portfolio value over 90 days.

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

Saga Communications  vs.  AMC Networks

Saga Communications

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Saga Communications has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's technical and fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

AMC Networks

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AMC Networks has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong fundamental indicators, AMC Networks is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Saga Communications and AMC Networks

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

The idea behind Saga Communications and AMC Networks 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.

Check out your portfolio center.

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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.