Correlation Between AGVC and EM

Can any of the company-specific risk be diversified away by investing in both AGVC and EM 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 AGVC and EM into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between AGVC and EM, you can compare the effects of market volatilities on AGVC and EM 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 AGVC with a short position of EM. Check out your portfolio center. Please also check ongoing floating volatility patterns of AGVC and EM.

Diversification Opportunities for AGVC and EM

0.15

Correlation Coefficient

AGVC  EM

Average diversification

The 3 months correlation between AGVC and EM is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding AGVC and EM in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EM and AGVC 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 AGVC are associated (or correlated) with EM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EM has no effect on the direction of AGVC i.e., AGVC and EM go up and down completely randomly.

Pair Corralation between AGVC and EM

If you would invest  0.19  in AGVC on January 30, 2024 and sell it today you would earn a total of  0.00  from holding AGVC or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	2.33%
Values	Daily Returns

AGVC  vs.  EM

AGVC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AGVC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, AGVC is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

EM

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in EM are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, EM may actually be approaching a critical reversion point that can send shares even higher in May 2024.

Pair Trading with AGVC and EM

The main advantage of trading using opposite AGVC and EM positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AGVC position performs unexpectedly, EM 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 EM will offset losses from the drop in EM's long position.

The idea behind AGVC and EM 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.

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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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.