Correlation Between AGF Management and Alaska Energy

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

Diversification Opportunities for AGF Management and Alaska Energy

-0.55

Correlation Coefficient

AGF Management  Alaska Energy

Excellent diversification

The 3 months correlation between AGF and Alaska is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding AGF Management Limited and Alaska Energy Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alaska Energy Metals 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 Alaska Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alaska Energy Metals has no effect on the direction of AGF Management i.e., AGF Management and Alaska Energy go up and down completely randomly.

Pair Corralation between AGF Management and Alaska Energy

Assuming the 90 days trading horizon AGF Management Limited is expected to generate 0.45 times more return on investment than Alaska Energy. However, AGF Management Limited is 2.24 times less risky than Alaska Energy. It trades about 0.19 of its potential returns per unit of risk. Alaska Energy Metals is currently generating about -0.12 per unit of risk. If you would invest  874.00  in AGF Management Limited on September 26, 2024 and sell it today you would earn a total of  206.00  from holding AGF Management Limited or generate 23.57% 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.  Alaska Energy Metals

AGF Management

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in AGF Management Limited are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating basic indicators, AGF Management unveiled solid returns over the last few months and may actually be approaching a breakup point.

Alaska Energy Metals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Alaska Energy Metals 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 primary indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with AGF Management and Alaska Energy

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

The idea behind AGF Management Limited and Alaska Energy Metals 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.