Correlation Between AGF Management and Nova Leap

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

Diversification Opportunities for AGF Management and Nova Leap

-0.22

Correlation Coefficient

AGF Management  Nova Leap

Very good diversification

The 3 months correlation between AGF and Nova is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding AGF Management Limited and Nova Leap Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nova Leap Health 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 Nova Leap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nova Leap Health has no effect on the direction of AGF Management i.e., AGF Management and Nova Leap go up and down completely randomly.

Pair Corralation between AGF Management and Nova Leap

Assuming the 90 days trading horizon AGF Management Limited is expected to under-perform the Nova Leap. But the stock apears to be less risky and, when comparing its historical volatility, AGF Management Limited is 2.17 times less risky than Nova Leap. The stock trades about -0.03 of its potential returns per unit of risk. The Nova Leap Health is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  27.00  in Nova Leap Health on December 28, 2024 and sell it today you would lose (2.00) from holding Nova Leap Health or give up 7.41% of portfolio value over 90 days.

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

AGF Management Limited  vs.  Nova Leap Health

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.

Nova Leap Health

Risk-Adjusted Performance

Very Weak

Over the last 90 days Nova Leap Health has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Nova Leap is not utilizing all of its potentials. The recent stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with AGF Management and Nova Leap

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

The idea behind AGF Management Limited and Nova Leap Health 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..