Correlation Between Agilent Technologies and DiaMedica Therapeutics

Can any of the company-specific risk be diversified away by investing in both Agilent Technologies and DiaMedica Therapeutics 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 Agilent Technologies and DiaMedica Therapeutics into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Agilent Technologies and DiaMedica Therapeutics

-0.13

Correlation Coefficient

Agilent Technologies  DiaMedica Therapeutics

Good diversification

The 3 months correlation between Agilent and DiaMedica is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Agilent Technologies and DiaMedica Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DiaMedica Therapeutics and Agilent Technologies 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 Agilent Technologies are associated (or correlated) with DiaMedica Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DiaMedica Therapeutics has no effect on the direction of Agilent Technologies i.e., Agilent Technologies and DiaMedica Therapeutics go up and down completely randomly.

Pair Corralation between Agilent Technologies and DiaMedica Therapeutics

Taking into account the 90-day investment horizon Agilent Technologies is expected to generate 12.28 times less return on investment than DiaMedica Therapeutics. But when comparing it to its historical volatility, Agilent Technologies is 2.88 times less risky than DiaMedica Therapeutics. It trades about 0.01 of its potential returns per unit of risk. DiaMedica Therapeutics is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  162.00  in DiaMedica Therapeutics on January 17, 2024 and sell it today you would earn a total of  77.00  from holding DiaMedica Therapeutics or generate 47.53% return on investment over 90 days.

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

Agilent Technologies  vs.  DiaMedica Therapeutics

Agilent Technologies

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Agilent Technologies are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat fragile basic indicators, Agilent Technologies may actually be approaching a critical reversion point that can send shares even higher in May 2024.

DiaMedica Therapeutics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days DiaMedica Therapeutics 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 sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Agilent Technologies and DiaMedica Therapeutics

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

The idea behind Agilent Technologies and DiaMedica Therapeutics 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 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..