Correlation Between Agha Steel and Organic Meat

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

By analyzing existing cross correlation between Agha Steel Industries and The Organic Meat, you can compare the effects of market volatilities on Agha Steel and Organic Meat 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 Agha Steel with a short position of Organic Meat. Check out your portfolio center. Please also check ongoing floating volatility patterns of Agha Steel and Organic Meat.

Diversification Opportunities for Agha Steel and Organic Meat

0.51

Correlation Coefficient

Agha Steel  Organic Meat

Very weak diversification

The 3 months correlation between Agha and Organic is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Agha Steel Industries and The Organic Meat in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Organic Meat and Agha Steel 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 Agha Steel Industries are associated (or correlated) with Organic Meat. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Organic Meat has no effect on the direction of Agha Steel i.e., Agha Steel and Organic Meat go up and down completely randomly.

Pair Corralation between Agha Steel and Organic Meat

Assuming the 90 days trading horizon Agha Steel Industries is expected to under-perform the Organic Meat. In addition to that, Agha Steel is 1.34 times more volatile than The Organic Meat. It trades about -0.07 of its total potential returns per unit of risk. The Organic Meat is currently generating about -0.01 per unit of volatility. If you would invest  3,535  in The Organic Meat on October 25, 2024 and sell it today you would lose (121.00) from holding The Organic Meat or give up 3.42% of portfolio value over 90 days.

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

Agha Steel Industries  vs.  The Organic Meat

Agha Steel Industries

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Agha Steel Industries has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Organic Meat

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days The Organic Meat has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent primary indicators, Organic Meat is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Agha Steel and Organic Meat

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

The idea behind Agha Steel Industries and The Organic Meat 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.