Correlation Between ASE Industrial and AGF Management
Can any of the company-specific risk be diversified away by investing in both ASE Industrial and AGF Management 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 ASE Industrial and AGF Management into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ASE Industrial Holding and AGF Management Limited, you can compare the effects of market volatilities on ASE Industrial and AGF Management 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 ASE Industrial with a short position of AGF Management. Check out your portfolio center. Please also check ongoing floating volatility patterns of ASE Industrial and AGF Management.
Diversification Opportunities for ASE Industrial and AGF Management
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between ASE and AGF is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding ASE Industrial Holding and AGF Management Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AGF Management and ASE Industrial 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 ASE Industrial Holding are associated (or correlated) with AGF Management. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AGF Management has no effect on the direction of ASE Industrial i.e., ASE Industrial and AGF Management go up and down completely randomly.
Pair Corralation between ASE Industrial and AGF Management
Considering the 90-day investment horizon ASE Industrial Holding is expected to under-perform the AGF Management. But the stock apears to be less risky and, when comparing its historical volatility, ASE Industrial Holding is 1.48 times less risky than AGF Management. The stock trades about -0.26 of its potential returns per unit of risk. The AGF Management Limited is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest 583.00 in AGF Management Limited on January 23, 2024 and sell it today you would lose (14.00) from holding AGF Management Limited or give up 2.4% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
ASE Industrial Holding vs. AGF Management Limited
Performance |
Timeline |
ASE Industrial Holding |
AGF Management |
ASE Industrial and AGF Management Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with ASE Industrial and AGF Management
The main advantage of trading using opposite ASE Industrial and AGF Management positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ASE Industrial position performs unexpectedly, AGF Management 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 AGF Management will offset losses from the drop in AGF Management's long position.The idea behind ASE Industrial Holding and AGF Management Limited 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.AGF Management vs. Allspring Global Dividend | AGF Management vs. BNY Mellon High | AGF Management vs. Pioneer High Income | AGF Management vs. Allspring Utilities And |
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 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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