Correlation Between Agora and Worlds
Can any of the company-specific risk be diversified away by investing in both Agora and Worlds 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 Agora and Worlds into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Agora Inc and Worlds Inc, you can compare the effects of market volatilities on Agora and Worlds 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 Agora with a short position of Worlds. Check out your portfolio center. Please also check ongoing floating volatility patterns of Agora and Worlds.
Diversification Opportunities for Agora and Worlds
Very good diversification
The 3 months correlation between Agora and Worlds is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Agora Inc and Worlds Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Worlds Inc and Agora 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 Agora Inc are associated (or correlated) with Worlds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Worlds Inc has no effect on the direction of Agora i.e., Agora and Worlds go up and down completely randomly.
Pair Corralation between Agora and Worlds
Considering the 90-day investment horizon Agora is expected to generate 5.99 times less return on investment than Worlds. But when comparing it to its historical volatility, Agora Inc is 3.06 times less risky than Worlds. It trades about 0.12 of its potential returns per unit of risk. Worlds Inc is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest 0.77 in Worlds Inc on October 23, 2024 and sell it today you would earn a total of 0.52 from holding Worlds Inc or generate 67.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Agora Inc vs. Worlds Inc
Performance |
| Timeline |
| Agora Inc |
| Worlds Inc |
Agora and Worlds Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Agora and Worlds
The main advantage of trading using opposite Agora and Worlds positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Agora position performs unexpectedly, Worlds 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 Worlds will offset losses from the drop in Worlds' long position.The idea behind Agora Inc and Worlds Inc pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Worlds vs. Agora Inc | Worlds vs. Upland Software | Worlds vs. Hitek Global Ordinary | Worlds vs. CS Disco LLC |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
Other Complementary Tools
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios | |
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments |