Correlation Between AGF Management and GEA GROUP
Can any of the company-specific risk be diversified away by investing in both AGF Management and GEA GROUP 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 GEA GROUP 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 GEA GROUP, you can compare the effects of market volatilities on AGF Management and GEA GROUP 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 GEA GROUP. Check out your portfolio center. Please also check ongoing floating volatility patterns of AGF Management and GEA GROUP.
Diversification Opportunities for AGF Management and GEA GROUP
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between AGF and GEA is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding AGF Management Limited and GEA GROUP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GEA GROUP 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 GEA GROUP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GEA GROUP has no effect on the direction of AGF Management i.e., AGF Management and GEA GROUP go up and down completely randomly.
Pair Corralation between AGF Management and GEA GROUP
Assuming the 90 days horizon AGF Management Limited is expected to generate 2.1 times more return on investment than GEA GROUP. However, AGF Management is 2.1 times more volatile than GEA GROUP. It trades about 0.17 of its potential returns per unit of risk. GEA GROUP is currently generating about -0.03 per unit of risk. If you would invest 675.00 in AGF Management Limited on August 29, 2024 and sell it today you would earn a total of 50.00 from holding AGF Management Limited or generate 7.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
AGF Management Limited vs. GEA GROUP
Performance |
| Timeline |
| AGF Management |
| GEA GROUP |
AGF Management and GEA GROUP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AGF Management and GEA GROUP
The main advantage of trading using opposite AGF Management and GEA GROUP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AGF Management position performs unexpectedly, GEA GROUP 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 GEA GROUP will offset losses from the drop in GEA GROUP's long position.| AGF Management vs. Diamondrock Hospitality Co | AGF Management vs. Ramsay Health Care | AGF Management vs. THRACE PLASTICS | AGF Management vs. DiamondRock Hospitality |
| GEA GROUP vs. Superior Plus Corp | GEA GROUP vs. NMI Holdings | GEA GROUP vs. Origin Agritech | GEA GROUP vs. SIVERS SEMICONDUCTORS AB |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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