Correlation Between AGF Management and Bounce Mobile

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

Diversification Opportunities for AGF Management and Bounce Mobile

-0.39

Correlation Coefficient

AGF Management  Bounce Mobile

Very good diversification

The 3 months correlation between AGF and Bounce is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding AGF Management Limited and Bounce Mobile Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bounce Mobile Systems 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 Bounce Mobile. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bounce Mobile Systems has no effect on the direction of AGF Management i.e., AGF Management and Bounce Mobile go up and down completely randomly.

Pair Corralation between AGF Management and Bounce Mobile

Assuming the 90 days horizon AGF Management is expected to generate 4.58 times less return on investment than Bounce Mobile. But when comparing it to its historical volatility, AGF Management Limited is 11.18 times less risky than Bounce Mobile. It trades about 0.25 of its potential returns per unit of risk. Bounce Mobile Systems is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  2.35  in Bounce Mobile Systems on August 31, 2024 and sell it today you would earn a total of  0.15  from holding Bounce Mobile Systems or generate 6.38% 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.  Bounce Mobile Systems

AGF Management

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in AGF Management Limited are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile primary indicators, AGF Management reported solid returns over the last few months and may actually be approaching a breakup point.

Bounce Mobile Systems

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Bounce Mobile Systems are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very inconsistent fundamental indicators, Bounce Mobile displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with AGF Management and Bounce Mobile

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

The idea behind AGF Management Limited and Bounce Mobile Systems 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.

Check out your portfolio center.

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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.