Correlation Between AGF Management and Fjordland Exploration

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

Diversification Opportunities for AGF Management and Fjordland Exploration

-0.49

Correlation Coefficient

AGF Management  Fjordland Exploration

Very good diversification

The 3 months correlation between AGF and Fjordland is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding AGF Management Limited and Fjordland Exploration in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fjordland Exploration 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 Fjordland Exploration. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fjordland Exploration has no effect on the direction of AGF Management i.e., AGF Management and Fjordland Exploration go up and down completely randomly.

Pair Corralation between AGF Management and Fjordland Exploration

If you would invest  1.00  in Fjordland Exploration on October 8, 2024 and sell it today you would earn a total of  0.00  from holding Fjordland Exploration or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	94.44%
Values	Daily Returns

AGF Management Limited  vs.  Fjordland Exploration

AGF Management

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in AGF Management Limited are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. 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.

Fjordland Exploration

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Fjordland Exploration are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Fjordland Exploration showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with AGF Management and Fjordland Exploration

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

The idea behind AGF Management Limited and Fjordland Exploration 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.