Correlation Between AGF Management and Sumitomo Chemical
Can any of the company-specific risk be diversified away by investing in both AGF Management and Sumitomo Chemical 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 Sumitomo Chemical 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 Sumitomo Chemical, you can compare the effects of market volatilities on AGF Management and Sumitomo Chemical 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 Sumitomo Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of AGF Management and Sumitomo Chemical.
Diversification Opportunities for AGF Management and Sumitomo Chemical
-0.63 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between AGF and Sumitomo is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding AGF Management Limited and Sumitomo Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sumitomo Chemical 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 Sumitomo Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sumitomo Chemical has no effect on the direction of AGF Management i.e., AGF Management and Sumitomo Chemical go up and down completely randomly.
Pair Corralation between AGF Management and Sumitomo Chemical
Assuming the 90 days horizon AGF Management Limited is expected to generate 0.75 times more return on investment than Sumitomo Chemical. However, AGF Management Limited is 1.33 times less risky than Sumitomo Chemical. It trades about 0.26 of its potential returns per unit of risk. Sumitomo Chemical is currently generating about -0.07 per unit of risk. If you would invest 516.00 in AGF Management Limited on August 25, 2024 and sell it today you would earn a total of 209.00 from holding AGF Management Limited or generate 40.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
AGF Management Limited vs. Sumitomo Chemical
Performance |
| Timeline |
| AGF Management |
| Sumitomo Chemical |
AGF Management and Sumitomo Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AGF Management and Sumitomo Chemical
The main advantage of trading using opposite AGF Management and Sumitomo Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AGF Management position performs unexpectedly, Sumitomo Chemical 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 Sumitomo Chemical will offset losses from the drop in Sumitomo Chemical's long position.| AGF Management vs. Constellation Software | AGF Management vs. EIDESVIK OFFSHORE NK | AGF Management vs. CPU SOFTWAREHOUSE | AGF Management vs. Solstad Offshore ASA |
| Sumitomo Chemical vs. Ultra Clean Holdings | Sumitomo Chemical vs. AGF Management Limited | Sumitomo Chemical vs. Clean Energy Fuels | Sumitomo Chemical vs. HEALTHCARE REAL A |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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