Correlation Between Agilysys and Trust Stamp

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

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

Diversification Opportunities for Agilysys and Trust Stamp

-0.78

Correlation Coefficient

Agilysys  Trust Stamp

Pay attention - limited upside

The 3 months correlation between Agilysys and Trust is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding Agilysys and Trust Stamp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Trust Stamp and Agilysys 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 Agilysys are associated (or correlated) with Trust Stamp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Trust Stamp has no effect on the direction of Agilysys i.e., Agilysys and Trust Stamp go up and down completely randomly.

Pair Corralation between Agilysys and Trust Stamp

Given the investment horizon of 90 days Agilysys is expected to generate 1.05 times more return on investment than Trust Stamp. However, Agilysys is 1.05 times more volatile than Trust Stamp. It trades about 0.18 of its potential returns per unit of risk. Trust Stamp is currently generating about -0.48 per unit of risk. If you would invest  8,270  in Agilysys on March 2, 2024 and sell it today you would earn a total of  1,181  from holding Agilysys or generate 14.28% return on investment over 90 days.

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

Agilysys  vs.  Trust Stamp

Agilysys

Risk-Adjusted Performance

10 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Agilysys are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Agilysys unveiled solid returns over the last few months and may actually be approaching a breakup point.

Trust Stamp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Trust Stamp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in July 2024. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with Agilysys and Trust Stamp

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

The idea behind Agilysys and Trust Stamp 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.