Correlation Between Ams AG and Advanced Micro

Can any of the company-specific risk be diversified away by investing in both Ams AG and Advanced Micro 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 AG and Advanced Micro into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between ams AG and Advanced Micro Devices, you can compare the effects of market volatilities on Ams AG and Advanced Micro 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 AG with a short position of Advanced Micro. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ams AG and Advanced Micro.

Diversification Opportunities for Ams AG and Advanced Micro

0.16

Correlation Coefficient

Ams AG  Advanced Micro

Average diversification

The 3 months correlation between Ams and Advanced is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding ams AG and Advanced Micro Devices in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Advanced Micro Devices and Ams AG 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 AG are associated (or correlated) with Advanced Micro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Advanced Micro Devices has no effect on the direction of Ams AG i.e., Ams AG and Advanced Micro go up and down completely randomly.

Pair Corralation between Ams AG and Advanced Micro

Assuming the 90 days horizon ams AG is expected to generate 3.01 times more return on investment than Advanced Micro. However, Ams AG is 3.01 times more volatile than Advanced Micro Devices. It trades about 0.17 of its potential returns per unit of risk. Advanced Micro Devices is currently generating about -0.17 per unit of risk. If you would invest  115.00  in ams AG on February 5, 2024 and sell it today you would earn a total of  34.00  from holding ams AG or generate 29.57% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

ams AG  vs.  Advanced Micro Devices

ams AG

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ams AG has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in June 2024. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Advanced Micro Devices

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Advanced Micro Devices has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's primary indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Ams AG and Advanced Micro

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

The idea behind ams AG and Advanced Micro Devices 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 CEOs Directory module to screen CEOs from public companies around the world.