Correlation Between AGF Management and Tokio Marine

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

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

Diversification Opportunities for AGF Management and Tokio Marine

-0.28

Correlation Coefficient

AGF Management  Tokio Marine

Very good diversification

The 3 months correlation between AGF and Tokio is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding AGF Management Limited and Tokio Marine Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tokio Marine Holdings and AGF Management 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 AGF Management Limited are associated (or correlated) with Tokio Marine. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tokio Marine Holdings has no effect on the direction of AGF Management i.e., AGF Management and Tokio Marine go up and down completely randomly.

Pair Corralation between AGF Management and Tokio Marine

Assuming the 90 days horizon AGF Management Limited is expected to under-perform the Tokio Marine. In addition to that, AGF Management is 1.07 times more volatile than Tokio Marine Holdings. It trades about -0.08 of its total potential returns per unit of risk. Tokio Marine Holdings is currently generating about 0.05 per unit of volatility. If you would invest  3,339  in Tokio Marine Holdings on December 19, 2024 and sell it today you would earn a total of  144.00  from holding Tokio Marine Holdings or generate 4.31% return on investment over 90 days.

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

AGF Management Limited  vs.  Tokio Marine Holdings

AGF Management

Risk-Adjusted Performance

Very Weak

Over the last 90 days AGF Management Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Tokio Marine Holdings

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Tokio Marine Holdings are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Tokio Marine is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with AGF Management and Tokio Marine

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

The idea behind AGF Management Limited and Tokio Marine Holdings 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.