Correlation Between AGRICUL BK and Evolution
Can any of the company-specific risk be diversified away by investing in both AGRICUL BK and Evolution 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 AGRICUL BK and Evolution into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AGRICUL BK CHINA H and Evolution AB, you can compare the effects of market volatilities on AGRICUL BK and Evolution 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 AGRICUL BK with a short position of Evolution. Check out your portfolio center. Please also check ongoing floating volatility patterns of AGRICUL BK and Evolution.
Diversification Opportunities for AGRICUL BK and Evolution
-0.57 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between AGRICUL and Evolution is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding AGRICUL BK CHINA H and Evolution AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Evolution AB and AGRICUL BK 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 AGRICUL BK CHINA H are associated (or correlated) with Evolution. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Evolution AB has no effect on the direction of AGRICUL BK i.e., AGRICUL BK and Evolution go up and down completely randomly.
Pair Corralation between AGRICUL BK and Evolution
Assuming the 90 days trading horizon AGRICUL BK CHINA H is expected to generate 1.08 times more return on investment than Evolution. However, AGRICUL BK is 1.08 times more volatile than Evolution AB. It trades about 0.08 of its potential returns per unit of risk. Evolution AB is currently generating about -0.03 per unit of risk. If you would invest 38.00 in AGRICUL BK CHINA H on August 28, 2024 and sell it today you would earn a total of 8.00 from holding AGRICUL BK CHINA H or generate 21.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
AGRICUL BK CHINA H vs. Evolution AB
Performance |
| Timeline |
| AGRICUL BK CHINA |
| Evolution AB |
AGRICUL BK and Evolution Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AGRICUL BK and Evolution
The main advantage of trading using opposite AGRICUL BK and Evolution positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AGRICUL BK position performs unexpectedly, Evolution 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 Evolution will offset losses from the drop in Evolution's long position.The idea behind AGRICUL BK CHINA H and Evolution AB 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.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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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