Correlation Between AGRICUL BK and Genuine Parts
Can any of the company-specific risk be diversified away by investing in both AGRICUL BK and Genuine Parts 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 Genuine Parts 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 Genuine Parts, you can compare the effects of market volatilities on AGRICUL BK and Genuine Parts 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 Genuine Parts. Check out your portfolio center. Please also check ongoing floating volatility patterns of AGRICUL BK and Genuine Parts.
Diversification Opportunities for AGRICUL BK and Genuine Parts
-0.53 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between AGRICUL and Genuine is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding AGRICUL BK CHINA H and Genuine Parts in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Genuine Parts 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 Genuine Parts. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Genuine Parts has no effect on the direction of AGRICUL BK i.e., AGRICUL BK and Genuine Parts go up and down completely randomly.
Pair Corralation between AGRICUL BK and Genuine Parts
Assuming the 90 days trading horizon AGRICUL BK CHINA H is expected to generate 0.84 times more return on investment than Genuine Parts. However, AGRICUL BK CHINA H is 1.2 times less risky than Genuine Parts. It trades about 0.08 of its potential returns per unit of risk. Genuine Parts is currently generating about -0.01 per unit of risk. If you would invest 41.00 in AGRICUL BK CHINA H on August 28, 2024 and sell it today you would earn a total of 5.00 from holding AGRICUL BK CHINA H or generate 12.2% 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. Genuine Parts
Performance |
| Timeline |
| AGRICUL BK CHINA |
| Genuine Parts |
AGRICUL BK and Genuine Parts Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AGRICUL BK and Genuine Parts
The main advantage of trading using opposite AGRICUL BK and Genuine Parts positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AGRICUL BK position performs unexpectedly, Genuine Parts 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 Genuine Parts will offset losses from the drop in Genuine Parts' long position.The idea behind AGRICUL BK CHINA H and Genuine Parts 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.| Genuine Parts vs. eBay Inc | Genuine Parts vs. Superior Plus Corp | Genuine Parts vs. NMI Holdings | Genuine Parts vs. Origin Agritech |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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