Correlation Between Agilent Technologies and Indutrade

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

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

Diversification Opportunities for Agilent Technologies and Indutrade

0.29

Correlation Coefficient

Agilent Technologies  Indutrade

Modest diversification

The 3 months correlation between Agilent and Indutrade is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Agilent Technologies and Indutrade AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Indutrade AB and Agilent Technologies 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 Agilent Technologies are associated (or correlated) with Indutrade. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Indutrade AB has no effect on the direction of Agilent Technologies i.e., Agilent Technologies and Indutrade go up and down completely randomly.

Pair Corralation between Agilent Technologies and Indutrade

Assuming the 90 days trading horizon Agilent Technologies is expected to generate 1.03 times more return on investment than Indutrade. However, Agilent Technologies is 1.03 times more volatile than Indutrade AB. It trades about 0.11 of its potential returns per unit of risk. Indutrade AB is currently generating about 0.01 per unit of risk. If you would invest  13,261  in Agilent Technologies on October 23, 2024 and sell it today you would earn a total of  1,428  from holding Agilent Technologies or generate 10.77% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.39%
Values	Daily Returns

Agilent Technologies  vs.  Indutrade AB

Agilent Technologies

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Agilent Technologies are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Agilent Technologies may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Indutrade AB

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Indutrade AB are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Indutrade is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Agilent Technologies and Indutrade

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

The idea behind Agilent Technologies and Indutrade 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..