Correlation Between AGF Management and Sparx Technology

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

Diversification Opportunities for AGF Management and Sparx Technology

-0.22

Correlation Coefficient

AGF Management  Sparx Technology

Very good diversification

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

Pair Corralation between AGF Management and Sparx Technology

Assuming the 90 days trading horizon AGF Management Limited is expected to generate 0.5 times more return on investment than Sparx Technology. However, AGF Management Limited is 2.0 times less risky than Sparx Technology. It trades about 0.07 of its potential returns per unit of risk. Sparx Technology is currently generating about -0.03 per unit of risk. If you would invest  1,120  in AGF Management Limited on November 29, 2024 and sell it today you would earn a total of  62.00  from holding AGF Management Limited or generate 5.54% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.33%
Values	Daily Returns

AGF Management Limited  vs.  Sparx Technology

AGF Management

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in AGF Management Limited are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating basic indicators, AGF Management may actually be approaching a critical reversion point that can send shares even higher in March 2025.

Sparx Technology

Risk-Adjusted Performance

Very Weak

Over the last 90 days Sparx Technology has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal 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 AGF Management and Sparx Technology

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

The idea behind AGF Management Limited and Sparx Technology 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 Valuation module to check real value of public entities based on technical and fundamental data.