Correlation Between AGCO and Getlink SE

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Can any of the company-specific risk be diversified away by investing in both AGCO and Getlink SE 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 AGCO and Getlink SE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AGCO Corporation and Getlink SE, you can compare the effects of market volatilities on AGCO and Getlink SE 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 AGCO with a short position of Getlink SE. Check out your portfolio center. Please also check ongoing floating volatility patterns of AGCO and Getlink SE.

Diversification Opportunities for AGCO and Getlink SE

0.77
  Correlation Coefficient

Poor diversification

The 3 months correlation between AGCO and Getlink is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding AGCO Corp. and Getlink SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Getlink SE and AGCO 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 AGCO Corporation are associated (or correlated) with Getlink SE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Getlink SE has no effect on the direction of AGCO i.e., AGCO and Getlink SE go up and down completely randomly.

Pair Corralation between AGCO and Getlink SE

Given the investment horizon of 90 days AGCO Corporation is expected to generate 1.38 times more return on investment than Getlink SE. However, AGCO is 1.38 times more volatile than Getlink SE. It trades about -0.01 of its potential returns per unit of risk. Getlink SE is currently generating about -0.04 per unit of risk. If you would invest  12,328  in AGCO Corporation on December 29, 2023 and sell it today you would lose (156.00) from holding AGCO Corporation or give up 1.27% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

AGCO Corp.  vs.  Getlink SE

 Performance 
       Timeline  
AGCO 

Risk-Adjusted Performance

1 of 100

 
Low
 
High
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in AGCO Corporation are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy fundamental indicators, AGCO is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.
Getlink SE 

Risk-Adjusted Performance

0 of 100

 
Low
 
High
Very Weak
Over the last 90 days Getlink SE has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

AGCO and Getlink SE Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with AGCO and Getlink SE

The main advantage of trading using opposite AGCO and Getlink SE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AGCO position performs unexpectedly, Getlink SE 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 Getlink SE will offset losses from the drop in Getlink SE's long position.
The idea behind AGCO Corporation and Getlink SE 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.

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