Correlation Between AGP and Sardar Chemical

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

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

Diversification Opportunities for AGP and Sardar Chemical

0.27

Correlation Coefficient

AGP  Sardar Chemical

Modest diversification

The 3 months correlation between AGP and Sardar is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding AGP and Sardar Chemical Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sardar Chemical Indu and AGP 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 AGP are associated (or correlated) with Sardar Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sardar Chemical Indu has no effect on the direction of AGP i.e., AGP and Sardar Chemical go up and down completely randomly.

Pair Corralation between AGP and Sardar Chemical

Assuming the 90 days trading horizon AGP is expected to generate 0.65 times more return on investment than Sardar Chemical. However, AGP is 1.54 times less risky than Sardar Chemical. It trades about 0.1 of its potential returns per unit of risk. Sardar Chemical Industries is currently generating about 0.01 per unit of risk. If you would invest  16,250  in AGP on October 4, 2024 and sell it today you would earn a total of  760.00  from holding AGP or generate 4.68% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.24%
Values	Daily Returns

AGP  vs.  Sardar Chemical Industries

AGP

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in AGP are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, AGP reported solid returns over the last few months and may actually be approaching a breakup point.

Sardar Chemical Indu

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with AGP and Sardar Chemical

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

The idea behind AGP and Sardar 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.