Correlation Between AG Mortgage and CK Asset

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

By analyzing existing cross correlation between AG Mortgage Investment and CK Asset Holdings, you can compare the effects of market volatilities on AG Mortgage and CK Asset 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 AG Mortgage with a short position of CK Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of AG Mortgage and CK Asset.

Diversification Opportunities for AG Mortgage and CK Asset

0.33

Correlation Coefficient

AG Mortgage  CK Asset

Weak diversification

The 3 months correlation between MITT and CHKGF is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding AG Mortgage Investment and CK Asset Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CK Asset Holdings and AG Mortgage 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 AG Mortgage Investment are associated (or correlated) with CK Asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CK Asset Holdings has no effect on the direction of AG Mortgage i.e., AG Mortgage and CK Asset go up and down completely randomly.

Pair Corralation between AG Mortgage and CK Asset

Given the investment horizon of 90 days AG Mortgage Investment is expected to generate 0.87 times more return on investment than CK Asset. However, AG Mortgage Investment is 1.15 times less risky than CK Asset. It trades about -0.21 of its potential returns per unit of risk. CK Asset Holdings is currently generating about -0.25 per unit of risk. If you would invest  592.00  in AG Mortgage Investment on January 20, 2024 and sell it today you would lose (42.00) from holding AG Mortgage Investment or give up 7.09% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.45%
Values	Daily Returns

AG Mortgage Investment  vs.  CK Asset Holdings

AG Mortgage Investment

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AG Mortgage Investment has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest inconsistent performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

CK Asset Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CK Asset Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's technical and fundamental indicators remain nearly stable which may send shares a bit higher in May 2024. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with AG Mortgage and CK Asset

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

The idea behind AG Mortgage Investment and CK Asset Holdings 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.