Correlation Between Alkyl Amines and Agilent Technologies

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

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

Diversification Opportunities for Alkyl Amines and Agilent Technologies

-0.57

Correlation Coefficient

Alkyl Amines  Agilent Technologies

Excellent diversification

The 3 months correlation between Alkyl and Agilent is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Alkyl Amines Chemicals and Agilent Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Agilent Technologies and Alkyl Amines 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 Alkyl Amines Chemicals are associated (or correlated) with Agilent Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Agilent Technologies has no effect on the direction of Alkyl Amines i.e., Alkyl Amines and Agilent Technologies go up and down completely randomly.

Pair Corralation between Alkyl Amines and Agilent Technologies

Assuming the 90 days trading horizon Alkyl Amines Chemicals is expected to under-perform the Agilent Technologies. But the stock apears to be less risky and, when comparing its historical volatility, Alkyl Amines Chemicals is 1.07 times less risky than Agilent Technologies. The stock trades about -0.16 of its potential returns per unit of risk. The Agilent Technologies is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest  14,134  in Agilent Technologies on February 4, 2024 and sell it today you would lose (189.00) from holding Agilent Technologies or give up 1.34% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	90.91%
Values	Daily Returns

Alkyl Amines Chemicals  vs.  Agilent Technologies

Alkyl Amines Chemicals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Alkyl Amines Chemicals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's essential indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Agilent Technologies

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Agilent Technologies are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Agilent Technologies is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Alkyl Amines and Agilent Technologies

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

The idea behind Alkyl Amines Chemicals and Agilent Technologies 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.