Correlation Between AGF Management and Batero Gold

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

Diversification Opportunities for AGF Management and Batero Gold

-0.14

Correlation Coefficient

AGF Management  Batero Gold

Good diversification

The 3 months correlation between AGF and Batero is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding AGF Management Limited and Batero Gold Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Batero Gold Corp 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 Batero Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Batero Gold Corp has no effect on the direction of AGF Management i.e., AGF Management and Batero Gold go up and down completely randomly.

Pair Corralation between AGF Management and Batero Gold

Assuming the 90 days trading horizon AGF Management Limited is expected to under-perform the Batero Gold. But the stock apears to be less risky and, when comparing its historical volatility, AGF Management Limited is 5.06 times less risky than Batero Gold. The stock trades about -0.01 of its potential returns per unit of risk. The Batero Gold Corp is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  4.00  in Batero Gold Corp on December 21, 2024 and sell it today you would earn a total of  0.50  from holding Batero Gold Corp or generate 12.5% return on investment over 90 days.

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

AGF Management Limited  vs.  Batero Gold Corp

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.

Batero Gold Corp

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Batero Gold Corp are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Batero Gold showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with AGF Management and Batero Gold

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

The idea behind AGF Management Limited and Batero Gold Corp 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.