Correlation Between Ag Growth and Lycos Energy

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

By analyzing existing cross correlation between Ag Growth International and Lycos Energy, you can compare the effects of market volatilities on Ag Growth and Lycos Energy 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 Ag Growth with a short position of Lycos Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ag Growth and Lycos Energy.

Diversification Opportunities for Ag Growth and Lycos Energy

0.86

Correlation Coefficient

Ag Growth  Lycos Energy

Very poor diversification

The 3 months correlation between AFN and Lycos is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Ag Growth International and Lycos Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lycos Energy and Ag Growth 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 Ag Growth International are associated (or correlated) with Lycos Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lycos Energy has no effect on the direction of Ag Growth i.e., Ag Growth and Lycos Energy go up and down completely randomly.

Pair Corralation between Ag Growth and Lycos Energy

Assuming the 90 days trading horizon Ag Growth International is expected to under-perform the Lycos Energy. But the stock apears to be less risky and, when comparing its historical volatility, Ag Growth International is 1.21 times less risky than Lycos Energy. The stock trades about -0.21 of its potential returns per unit of risk. The Lycos Energy is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest  252.00  in Lycos Energy on December 19, 2024 and sell it today you would lose (32.00) from holding Lycos Energy or give up 12.7% of portfolio value over 90 days.

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

Ag Growth International  vs.  Lycos Energy

Ag Growth International

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ag Growth International has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Lycos Energy

Risk-Adjusted Performance

Very Weak

Over the last 90 days Lycos Energy has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Pair Trading with Ag Growth and Lycos Energy

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

The idea behind Ag Growth International and Lycos Energy 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.