Correlation Between Agritech and Hi Tech
Can any of the company-specific risk be diversified away by investing in both Agritech and Hi Tech 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 Agritech and Hi Tech into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Agritech and Hi Tech Lubricants, you can compare the effects of market volatilities on Agritech and Hi Tech 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 Agritech with a short position of Hi Tech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Agritech and Hi Tech.
Diversification Opportunities for Agritech and Hi Tech
Modest diversification
The 3 months correlation between Agritech and HTL is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Agritech and Hi Tech Lubricants in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hi Tech Lubricants and Agritech 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 Agritech are associated (or correlated) with Hi Tech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hi Tech Lubricants has no effect on the direction of Agritech i.e., Agritech and Hi Tech go up and down completely randomly.
Pair Corralation between Agritech and Hi Tech
Assuming the 90 days trading horizon Agritech is expected to generate 1.41 times more return on investment than Hi Tech. However, Agritech is 1.41 times more volatile than Hi Tech Lubricants. It trades about 0.12 of its potential returns per unit of risk. Hi Tech Lubricants is currently generating about 0.04 per unit of risk. If you would invest 550.00 in Agritech on August 24, 2024 and sell it today you would earn a total of 3,450 from holding Agritech or generate 627.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Agritech vs. Hi Tech Lubricants
Performance |
| Timeline |
| Agritech |
| Hi Tech Lubricants |
Agritech and Hi Tech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Agritech and Hi Tech
The main advantage of trading using opposite Agritech and Hi Tech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Agritech position performs unexpectedly, Hi Tech 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 Hi Tech will offset losses from the drop in Hi Tech's long position.| Agritech vs. Matco Foods | Agritech vs. Unilever Pakistan Foods | Agritech vs. Big Bird Foods | Agritech vs. Habib Insurance |
| Hi Tech vs. Shaheen Insurance | Hi Tech vs. Premier Insurance | Hi Tech vs. Crescent Star Insurance | Hi Tech vs. Adamjee Insurance |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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