Correlation Between Agrify Corp and ENGlobal

Can any of the company-specific risk be diversified away by investing in both Agrify Corp and ENGlobal 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 Agrify Corp and ENGlobal into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Agrify Corp and ENGlobal, you can compare the effects of market volatilities on Agrify Corp and ENGlobal 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 Agrify Corp with a short position of ENGlobal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Agrify Corp and ENGlobal.

Diversification Opportunities for Agrify Corp and ENGlobal

-0.06

Correlation Coefficient

Agrify Corp  ENGlobal

Good diversification

The 3 months correlation between Agrify and ENGlobal is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Agrify Corp and ENGlobal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ENGlobal and Agrify Corp 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 Agrify Corp are associated (or correlated) with ENGlobal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ENGlobal has no effect on the direction of Agrify Corp i.e., Agrify Corp and ENGlobal go up and down completely randomly.

Pair Corralation between Agrify Corp and ENGlobal

Given the investment horizon of 90 days Agrify Corp is expected to generate 1.95 times more return on investment than ENGlobal. However, Agrify Corp is 1.95 times more volatile than ENGlobal. It trades about 0.04 of its potential returns per unit of risk. ENGlobal is currently generating about -0.03 per unit of risk. If you would invest  6,000  in Agrify Corp on August 31, 2024 and sell it today you would lose (325.00) from holding Agrify Corp or give up 5.42% of portfolio value over 90 days.

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

Agrify Corp  vs.  ENGlobal

Agrify Corp

Risk-Adjusted Performance

26 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Agrify Corp are ranked lower than 26 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile technical and fundamental indicators, Agrify Corp showed solid returns over the last few months and may actually be approaching a breakup point.

ENGlobal

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ENGlobal has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Agrify Corp and ENGlobal

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

The idea behind Agrify Corp and ENGlobal 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.