Correlation Between AGF Management and China Pacific
Can any of the company-specific risk be diversified away by investing in both AGF Management and China Pacific 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 AGF Management and China Pacific into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AGF Management Limited and China Pacific Insurance, you can compare the effects of market volatilities on AGF Management and China Pacific 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 AGF Management with a short position of China Pacific. Check out your portfolio center. Please also check ongoing floating volatility patterns of AGF Management and China Pacific.
Diversification Opportunities for AGF Management and China Pacific
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between AGF and China is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding AGF Management Limited and China Pacific Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Pacific Insurance and AGF Management 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 AGF Management Limited are associated (or correlated) with China Pacific. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Pacific Insurance has no effect on the direction of AGF Management i.e., AGF Management and China Pacific go up and down completely randomly.
Pair Corralation between AGF Management and China Pacific
Assuming the 90 days horizon AGF Management is expected to generate 3.34 times less return on investment than China Pacific. But when comparing it to its historical volatility, AGF Management Limited is 3.09 times less risky than China Pacific. It trades about 0.1 of its potential returns per unit of risk. China Pacific Insurance is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 88.00 in China Pacific Insurance on September 14, 2024 and sell it today you would earn a total of 216.00 from holding China Pacific Insurance or generate 245.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
AGF Management Limited vs. China Pacific Insurance
Performance |
| Timeline |
| AGF Management |
| China Pacific Insurance |
AGF Management and China Pacific Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AGF Management and China Pacific
The main advantage of trading using opposite AGF Management and China Pacific positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AGF Management position performs unexpectedly, China Pacific 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 China Pacific will offset losses from the drop in China Pacific's long position.| AGF Management vs. New Residential Investment | AGF Management vs. FIREWEED METALS P | AGF Management vs. REGAL ASIAN INVESTMENTS | AGF Management vs. CDL INVESTMENT |
| China Pacific vs. TSOGO SUN GAMING | China Pacific vs. SOFI TECHNOLOGIES | China Pacific vs. THORNEY TECHS LTD | China Pacific vs. Media and Games |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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