Correlation Between American Software and Agilysys
Can any of the company-specific risk be diversified away by investing in both American Software and Agilysys 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 American Software and Agilysys into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Software and Agilysys, you can compare the effects of market volatilities on American Software and Agilysys 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 American Software with a short position of Agilysys. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Software and Agilysys.
Diversification Opportunities for American Software and Agilysys
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between American and Agilysys is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding American Software and Agilysys in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Agilysys and American Software 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 American Software are associated (or correlated) with Agilysys. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Agilysys has no effect on the direction of American Software i.e., American Software and Agilysys go up and down completely randomly.
Pair Corralation between American Software and Agilysys
Assuming the 90 days horizon American Software is expected to under-perform the Agilysys. But the stock apears to be less risky and, when comparing its historical volatility, American Software is 1.19 times less risky than Agilysys. The stock trades about -0.01 of its potential returns per unit of risk. The Agilysys is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 6,248 in Agilysys on August 28, 2024 and sell it today you would earn a total of 7,532 from holding Agilysys or generate 120.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 92.53% |
| Values | Daily Returns |
American Software vs. Agilysys
Performance |
| Timeline |
| American Software |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Agilysys |
American Software and Agilysys Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Software and Agilysys
The main advantage of trading using opposite American Software and Agilysys positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Software position performs unexpectedly, Agilysys 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 Agilysys will offset losses from the drop in Agilysys' long position.| American Software vs. Paycor HCM | American Software vs. Appfolio | American Software vs. Agilysys | American Software vs. Meridianlink |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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