Correlation Between Agritech and National Bank

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

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

Diversification Opportunities for Agritech and National Bank

0.12

Correlation Coefficient

Agritech  National Bank

Average diversification

The 3 months correlation between Agritech and National is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Agritech and National Bank of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Bank and Agritech 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 Agritech are associated (or correlated) with National Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National Bank has no effect on the direction of Agritech i.e., Agritech and National Bank go up and down completely randomly.

Pair Corralation between Agritech and National Bank

Assuming the 90 days trading horizon Agritech is expected to generate 0.66 times more return on investment than National Bank. However, Agritech is 1.51 times less risky than National Bank. It trades about 0.07 of its potential returns per unit of risk. National Bank of is currently generating about 0.01 per unit of risk. If you would invest  3,366  in Agritech on September 30, 2024 and sell it today you would earn a total of  292.00  from holding Agritech or generate 8.67% return on investment over 90 days.

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

Agritech  vs.  National Bank of

Agritech

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Agritech are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Agritech may actually be approaching a critical reversion point that can send shares even higher in January 2025.

National Bank

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in National Bank of are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, National Bank is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Agritech and National Bank

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

The idea behind Agritech and National Bank of 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.