Correlation Between Ag Growth and Austin Engineering

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

By analyzing existing cross correlation between Ag Growth International and Austin Engineering Limited, you can compare the effects of market volatilities on Ag Growth and Austin Engineering 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 Ag Growth with a short position of Austin Engineering. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ag Growth and Austin Engineering.

Diversification Opportunities for Ag Growth and Austin Engineering

0.62

Correlation Coefficient

Ag Growth  Austin Engineering

Poor diversification

The 3 months correlation between AGGZF and Austin is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Ag Growth International and Austin Engineering Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Austin Engineering and Ag Growth 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 Ag Growth International are associated (or correlated) with Austin Engineering. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Austin Engineering has no effect on the direction of Ag Growth i.e., Ag Growth and Austin Engineering go up and down completely randomly.

Pair Corralation between Ag Growth and Austin Engineering

Assuming the 90 days horizon Ag Growth International is expected to under-perform the Austin Engineering. But the pink sheet apears to be less risky and, when comparing its historical volatility, Ag Growth International is 1.48 times less risky than Austin Engineering. The pink sheet trades about -0.17 of its potential returns per unit of risk. The Austin Engineering Limited is currently generating about -0.11 of returns per unit of risk over similar time horizon. If you would invest  39.00  in Austin Engineering Limited on December 29, 2024 and sell it today you would lose (14.00) from holding Austin Engineering Limited or give up 35.9% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	87.5%
Values	Daily Returns

Ag Growth International  vs.  Austin Engineering Limited

Ag Growth International

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ag Growth International has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Austin Engineering

Risk-Adjusted Performance

Very Weak

Over the last 90 days Austin Engineering Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Ag Growth and Austin Engineering

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

The idea behind Ag Growth International and Austin Engineering Limited 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.