Correlation Between AGI Greenpac and Archean Chemical

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

By analyzing existing cross correlation between AGI Greenpac Limited and Archean Chemical Industries, you can compare the effects of market volatilities on AGI Greenpac and Archean Chemical 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 AGI Greenpac with a short position of Archean Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of AGI Greenpac and Archean Chemical.

Diversification Opportunities for AGI Greenpac and Archean Chemical

0.81

Correlation Coefficient

AGI Greenpac  Archean Chemical

Very poor diversification

The 3 months correlation between AGI and Archean is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding AGI Greenpac Limited and Archean Chemical Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Archean Chemical Ind and AGI Greenpac 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 AGI Greenpac Limited are associated (or correlated) with Archean Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Archean Chemical Ind has no effect on the direction of AGI Greenpac i.e., AGI Greenpac and Archean Chemical go up and down completely randomly.

Pair Corralation between AGI Greenpac and Archean Chemical

Assuming the 90 days trading horizon AGI Greenpac Limited is expected to under-perform the Archean Chemical. In addition to that, AGI Greenpac is 1.18 times more volatile than Archean Chemical Industries. It trades about -0.14 of its total potential returns per unit of risk. Archean Chemical Industries is currently generating about -0.1 per unit of volatility. If you would invest  66,605  in Archean Chemical Industries on December 29, 2024 and sell it today you would lose (14,815) from holding Archean Chemical Industries or give up 22.24% of portfolio value over 90 days.

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

AGI Greenpac Limited  vs.  Archean Chemical Industries

AGI Greenpac Limited

Risk-Adjusted Performance

Very Weak

Over the last 90 days AGI Greenpac Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Archean Chemical Ind

Risk-Adjusted Performance

Very Weak

Over the last 90 days Archean Chemical Industries has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with AGI Greenpac and Archean Chemical

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

The idea behind AGI Greenpac Limited and Archean Chemical Industries 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..