Correlation Between AGNC INVESTMENT and New China

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Can any of the company-specific risk be diversified away by investing in both AGNC INVESTMENT and New China 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 AGNC INVESTMENT and New China into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AGNC INVESTMENT and New China Life, you can compare the effects of market volatilities on AGNC INVESTMENT and New China 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 AGNC INVESTMENT with a short position of New China. Check out your portfolio center. Please also check ongoing floating volatility patterns of AGNC INVESTMENT and New China.

Diversification Opportunities for AGNC INVESTMENT and New China

AGNCNewDiversified AwayAGNCNewDiversified Away100%
0.49
  Correlation Coefficient

Very weak diversification

The 3 months correlation between AGNC and New is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding AGNC INVESTMENT and New China Life in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New China Life and AGNC INVESTMENT 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 AGNC INVESTMENT are associated (or correlated) with New China. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New China Life has no effect on the direction of AGNC INVESTMENT i.e., AGNC INVESTMENT and New China go up and down completely randomly.

Pair Corralation between AGNC INVESTMENT and New China

Assuming the 90 days trading horizon AGNC INVESTMENT is expected to generate 0.42 times more return on investment than New China. However, AGNC INVESTMENT is 2.4 times less risky than New China. It trades about 0.2 of its potential returns per unit of risk. New China Life is currently generating about 0.04 per unit of risk. If you would invest  875.00  in AGNC INVESTMENT on November 18, 2024 and sell it today you would earn a total of  116.00  from holding AGNC INVESTMENT or generate 13.26% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

AGNC INVESTMENT  vs.  New China Life

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb -50510
JavaScript chart by amCharts 3.21.154OQ1 NCL
       Timeline  
AGNC INVESTMENT 

Risk-Adjusted Performance

Good

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in AGNC INVESTMENT are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, AGNC INVESTMENT unveiled solid returns over the last few months and may actually be approaching a breakup point.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb8.899.29.49.69.810
New China Life 

Risk-Adjusted Performance

Insignificant

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in New China Life are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile essential indicators, New China may actually be approaching a critical reversion point that can send shares even higher in March 2025.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb2.72.82.933.1

AGNC INVESTMENT and New China Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-3.28-2.46-1.63-0.810.00.911.822.723.63 0.050.100.150.200.250.30
JavaScript chart by amCharts 3.21.154OQ1 NCL
       Returns  

Pair Trading with AGNC INVESTMENT and New China

The main advantage of trading using opposite AGNC INVESTMENT and New China positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AGNC INVESTMENT position performs unexpectedly, New China 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 New China will offset losses from the drop in New China's long position.
The idea behind AGNC INVESTMENT and New China Life 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 Global Correlations module to find global opportunities by holding instruments from different markets.

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