Correlation Between AMG Advanced and SPEAR Investments

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

Diversification Opportunities for AMG Advanced and SPEAR Investments

-0.63

Correlation Coefficient

AMG Advanced  SPEAR Investments

Excellent diversification

The 3 months correlation between AMG and SPEAR is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding AMG Advanced Metallurgical and SPEAR Investments I in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPEAR Investments 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 SPEAR Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPEAR Investments has no effect on the direction of AMG Advanced i.e., AMG Advanced and SPEAR Investments go up and down completely randomly.

Pair Corralation between AMG Advanced and SPEAR Investments

Assuming the 90 days trading horizon AMG Advanced Metallurgical is expected to generate 3.17 times more return on investment than SPEAR Investments. However, AMG Advanced is 3.17 times more volatile than SPEAR Investments I. It trades about 0.29 of its potential returns per unit of risk. SPEAR Investments I is currently generating about -0.13 per unit of risk. If you would invest  1,543  in AMG Advanced Metallurgical on April 24, 2025 and sell it today you would earn a total of  1,123  from holding AMG Advanced Metallurgical or generate 72.78% 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.  SPEAR Investments I

AMG Advanced Metallu

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in AMG Advanced Metallurgical are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain technical and fundamental indicators, AMG Advanced unveiled solid returns over the last few months and may actually be approaching a breakup point.

SPEAR Investments

Risk-Adjusted Performance

Very Weak

Over the last 90 days SPEAR Investments I has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with AMG Advanced and SPEAR Investments

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

The idea behind AMG Advanced Metallurgical and SPEAR Investments I 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.