Correlation Between AMS Small and HAL Trust

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

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

Diversification Opportunities for AMS Small and HAL Trust

0.93

Correlation Coefficient

AMS Small  HAL Trust

Almost no diversification

The 3 months correlation between AMS and HAL is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding AMS Small Cap and HAL Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HAL Trust and AMS Small 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 AMS Small Cap are associated (or correlated) with HAL Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HAL Trust has no effect on the direction of AMS Small i.e., AMS Small and HAL Trust go up and down completely randomly.

Pair Corralation between AMS Small and HAL Trust

Assuming the 90 days trading horizon AMS Small is expected to generate 1.17 times less return on investment than HAL Trust. In addition to that, AMS Small is 1.08 times more volatile than HAL Trust. It trades about 0.18 of its total potential returns per unit of risk. HAL Trust is currently generating about 0.23 per unit of volatility. If you would invest  11,109  in HAL Trust on April 21, 2025 and sell it today you would earn a total of  1,351  from holding HAL Trust or generate 12.16% return on investment over 90 days.

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

AMS Small Cap  vs.  HAL Trust

Pair Trading with AMS Small and HAL Trust

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

The idea behind AMS Small Cap and HAL Trust 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.