Correlation Between Worlds and Agora
Can any of the company-specific risk be diversified away by investing in both Worlds and Agora 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 Worlds and Agora into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Worlds Inc and Agora Inc, you can compare the effects of market volatilities on Worlds and Agora 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 Worlds with a short position of Agora. Check out your portfolio center. Please also check ongoing floating volatility patterns of Worlds and Agora.
Diversification Opportunities for Worlds and Agora
Excellent diversification
The 3 months correlation between Worlds and Agora is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Worlds Inc and Agora Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Agora Inc and Worlds 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 Worlds Inc are associated (or correlated) with Agora. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Agora Inc has no effect on the direction of Worlds i.e., Worlds and Agora go up and down completely randomly.
Pair Corralation between Worlds and Agora
Given the investment horizon of 90 days Worlds Inc is expected to generate 2.8 times more return on investment than Agora. However, Worlds is 2.8 times more volatile than Agora Inc. It trades about 0.07 of its potential returns per unit of risk. Agora Inc is currently generating about 0.08 per unit of risk. If you would invest 4.00 in Worlds Inc on September 3, 2024 and sell it today you would lose (2.74) from holding Worlds Inc or give up 68.5% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Worlds Inc vs. Agora Inc
Performance |
| Timeline |
| Worlds Inc |
| Agora Inc |
Worlds and Agora Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Worlds and Agora
The main advantage of trading using opposite Worlds and Agora positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Worlds position performs unexpectedly, Agora 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 Agora will offset losses from the drop in Agora's long position.| 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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