Correlation Between Alliance Resource and Agrify Corp
Can any of the company-specific risk be diversified away by investing in both Alliance Resource and Agrify Corp 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 Alliance Resource and Agrify Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alliance Resource Partners and Agrify Corp, you can compare the effects of market volatilities on Alliance Resource and Agrify Corp 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 Alliance Resource with a short position of Agrify Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alliance Resource and Agrify Corp.
Diversification Opportunities for Alliance Resource and Agrify Corp
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Alliance and Agrify is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Alliance Resource Partners and Agrify Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Agrify Corp and Alliance Resource 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 Alliance Resource Partners are associated (or correlated) with Agrify Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Agrify Corp has no effect on the direction of Alliance Resource i.e., Alliance Resource and Agrify Corp go up and down completely randomly.
Pair Corralation between Alliance Resource and Agrify Corp
Given the investment horizon of 90 days Alliance Resource is expected to generate 2.92 times less return on investment than Agrify Corp. But when comparing it to its historical volatility, Alliance Resource Partners is 7.05 times less risky than Agrify Corp. It trades about 0.07 of its potential returns per unit of risk. Agrify Corp is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 24,000 in Agrify Corp on September 3, 2024 and sell it today you would lose (18,325) from holding Agrify Corp or give up 76.35% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Alliance Resource Partners vs. Agrify Corp
Performance |
| Timeline |
| Alliance Resource |
| Agrify Corp |
Alliance Resource and Agrify Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alliance Resource and Agrify Corp
The main advantage of trading using opposite Alliance Resource and Agrify Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alliance Resource position performs unexpectedly, Agrify Corp 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 Agrify Corp will offset losses from the drop in Agrify Corp's long position.| Alliance Resource vs. Peabody Energy Corp | Alliance Resource vs. Natural Resource Partners | Alliance Resource vs. Hallador Energy | Alliance Resource vs. NACCO Industries |
| Agrify Corp vs. MYR Group | Agrify Corp vs. Granite Construction Incorporated | Agrify Corp vs. Construction Partners | Agrify Corp vs. Great Lakes Dredge |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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