Correlation Between AGF Management and PROSIEBENSAT1 MEDIADR4

Can any of the company-specific risk be diversified away by investing in both AGF Management and PROSIEBENSAT1 MEDIADR4 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 PROSIEBENSAT1 MEDIADR4 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 PROSIEBENSAT1 MEDIADR4, you can compare the effects of market volatilities on AGF Management and PROSIEBENSAT1 MEDIADR4 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 PROSIEBENSAT1 MEDIADR4. Check out your portfolio center. Please also check ongoing floating volatility patterns of AGF Management and PROSIEBENSAT1 MEDIADR4.

Diversification Opportunities for AGF Management and PROSIEBENSAT1 MEDIADR4

-0.57

Correlation Coefficient

AGF Management  PROSIEBENSAT1 MEDIADR4

Excellent diversification

The 3 months correlation between AGF and PROSIEBENSAT1 is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding AGF Management Limited and PROSIEBENSAT1 MEDIADR4 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PROSIEBENSAT1 MEDIADR4 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 PROSIEBENSAT1 MEDIADR4. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PROSIEBENSAT1 MEDIADR4 has no effect on the direction of AGF Management i.e., AGF Management and PROSIEBENSAT1 MEDIADR4 go up and down completely randomly.

Pair Corralation between AGF Management and PROSIEBENSAT1 MEDIADR4

Assuming the 90 days horizon AGF Management Limited is expected to under-perform the PROSIEBENSAT1 MEDIADR4. But the stock apears to be less risky and, when comparing its historical volatility, AGF Management Limited is 3.22 times less risky than PROSIEBENSAT1 MEDIADR4. The stock trades about -0.26 of its potential returns per unit of risk. The PROSIEBENSAT1 MEDIADR4 is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  115.00  in PROSIEBENSAT1 MEDIADR4 on October 5, 2024 and sell it today you would earn a total of  7.00  from holding PROSIEBENSAT1 MEDIADR4 or generate 6.09% return on investment over 90 days.

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

AGF Management Limited  vs.  PROSIEBENSAT1 MEDIADR4

AGF Management

Risk-Adjusted Performance

0 of 100

Modest

Over the last 90 days AGF Management Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, AGF Management is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

PROSIEBENSAT1 MEDIADR4

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PROSIEBENSAT1 MEDIADR4 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's primary indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with AGF Management and PROSIEBENSAT1 MEDIADR4

The main advantage of trading using opposite AGF Management and PROSIEBENSAT1 MEDIADR4 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AGF Management position performs unexpectedly, PROSIEBENSAT1 MEDIADR4 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 PROSIEBENSAT1 MEDIADR4 will offset losses from the drop in PROSIEBENSAT1 MEDIADR4's long position.

The idea behind AGF Management Limited and PROSIEBENSAT1 MEDIADR4 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.