Correlation Between AMG Advanced and Flow Traders

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

Diversification Opportunities for AMG Advanced and Flow Traders

0.09

Correlation Coefficient

AMG Advanced  Flow Traders

Significant diversification

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

Pair Corralation between AMG Advanced and Flow Traders

Assuming the 90 days trading horizon AMG Advanced Metallurgical is expected to under-perform the Flow Traders. In addition to that, AMG Advanced is 1.47 times more volatile than Flow Traders BV. It trades about -0.1 of its total potential returns per unit of risk. Flow Traders BV is currently generating about 0.11 per unit of volatility. If you would invest  1,778  in Flow Traders BV on March 14, 2024 and sell it today you would earn a total of  173.00  from holding Flow Traders BV or generate 9.73% return on investment over 90 days.

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

AMG Advanced Metallurgical  vs.  Flow Traders BV

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 July 2024. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Flow Traders BV

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Flow Traders BV are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Flow Traders may actually be approaching a critical reversion point that can send shares even higher in July 2024.

Pair Trading with AMG Advanced and Flow Traders

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

The idea behind AMG Advanced Metallurgical and Flow Traders BV 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..