Correlation Between Alaska Energy and AGF Management

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

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

Diversification Opportunities for Alaska Energy and AGF Management

0.51

Correlation Coefficient

Alaska Energy  AGF Management

Very weak diversification

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

Pair Corralation between Alaska Energy and AGF Management

Assuming the 90 days trading horizon Alaska Energy Metals is expected to generate 3.68 times more return on investment than AGF Management. However, Alaska Energy is 3.68 times more volatile than AGF Management Limited. It trades about 0.03 of its potential returns per unit of risk. AGF Management Limited is currently generating about -0.03 per unit of risk. If you would invest  11.00  in Alaska Energy Metals on December 29, 2024 and sell it today you would earn a total of  0.00  from holding Alaska Energy Metals or generate 0.0% return on investment over 90 days.

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

Alaska Energy Metals  vs.  AGF Management Limited

Alaska Energy Metals

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Alaska Energy Metals are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal primary indicators, Alaska Energy showed solid returns over the last few months and may actually be approaching a breakup point.

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. In spite of comparatively stable basic indicators, AGF Management is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Alaska Energy and AGF Management

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

The idea behind Alaska Energy Metals and AGF Management Limited 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.