Correlation Between ADX and Agroliga Group

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

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

Diversification Opportunities for ADX and Agroliga Group

-0.34

Correlation Coefficient

ADX  Agroliga Group

Very good diversification

The 3 months correlation between ADX and Agroliga is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding ADX and Agroliga Group PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Agroliga Group PLC and ADX 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 ADX are associated (or correlated) with Agroliga Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Agroliga Group PLC has no effect on the direction of ADX i.e., ADX and Agroliga Group go up and down completely randomly.

Pair Corralation between ADX and Agroliga Group

Assuming the 90 days trading horizon ADX is expected to generate 3.55 times less return on investment than Agroliga Group. But when comparing it to its historical volatility, ADX is 1.12 times less risky than Agroliga Group. It trades about 0.05 of its potential returns per unit of risk. Agroliga Group PLC is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  1,940  in Agroliga Group PLC on December 30, 2024 and sell it today you would earn a total of  1,060  from holding Agroliga Group PLC or generate 54.64% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	96.55%
Values	Daily Returns

ADX  vs.  Agroliga Group PLC

ADX

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in ADX are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, ADX reported solid returns over the last few months and may actually be approaching a breakup point.

Agroliga Group PLC

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Agroliga Group PLC are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Agroliga Group reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ADX and Agroliga Group

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

The idea behind ADX and Agroliga Group PLC 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.