Can any of the company-specific risk be diversified away by investing in both Agilysys and Inflection Point 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 Inflection Point into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Agilysys and Inflection Point Acquisition, you can compare the effects of market volatilities on Agilysys and Inflection Point 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 Inflection Point. Check out your portfolio center. Please also check ongoing floating volatility patterns of Agilysys and Inflection Point.
Diversification Opportunities for Agilysys and Inflection Point
The 3 months correlation between Agilysys and Inflection is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Agilysys and Inflection Point Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Inflection Point Acq 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 Inflection Point. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Inflection Point Acq has no effect on the direction of Agilysys i.e., Agilysys and Inflection Point go up and down completely randomly.
Pair Corralation between Agilysys and Inflection Point
Given the investment horizon of 90 days Agilysys is expected to generate 25.19 times more return on investment than Inflection Point. However, Agilysys is 25.19 times more volatile than Inflection Point Acquisition. It trades about 0.21 of its potential returns per unit of risk. Inflection Point Acquisition is currently generating about 0.26 per unit of risk. If you would invest 8,261 in Agilysys on August 30, 2023 and sell it today you would earn a total of 646.00 from holding Agilysys or generate 7.82% return on investment over 90 days.
Compared to the overall equity markets, risk-adjusted returns on investments in Agilysys are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Agilysys unveiled solid returns over the last few months and may actually be approaching a breakup point.
Compared to the overall equity markets, risk-adjusted returns on investments in Inflection Point Acquisition are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, Inflection Point is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.
The main advantage of trading using opposite Agilysys and Inflection Point positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Agilysys position performs unexpectedly, Inflection Point 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 Inflection Point will offset losses from the drop in Inflection Point's long position.
The idea behind Agilysys and Inflection Point Acquisition 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.
Check out your portfolio center.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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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