Correlation Between Agilent Technologies and GRI Bio

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

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

Diversification Opportunities for Agilent Technologies and GRI Bio

-0.51

Correlation Coefficient

Agilent Technologies  GRI Bio

Excellent diversification

The 3 months correlation between Agilent and GRI is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Agilent Technologies and GRI Bio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GRI Bio 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 GRI Bio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GRI Bio has no effect on the direction of Agilent Technologies i.e., Agilent Technologies and GRI Bio go up and down completely randomly.

Pair Corralation between Agilent Technologies and GRI Bio

Taking into account the 90-day investment horizon Agilent Technologies is expected to generate 6.41 times less return on investment than GRI Bio. But when comparing it to its historical volatility, Agilent Technologies is 5.09 times less risky than GRI Bio. It trades about 0.12 of its potential returns per unit of risk. GRI Bio is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  64.00  in GRI Bio on September 21, 2024 and sell it today you would earn a total of  13.00  from holding GRI Bio or generate 20.31% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Agilent Technologies  vs.  GRI Bio

Agilent Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Agilent Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Agilent Technologies is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

GRI Bio

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in GRI Bio are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak basic indicators, GRI Bio demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Agilent Technologies and GRI Bio

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

The idea behind Agilent Technologies and GRI Bio 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.