Correlation Between AGP and Synthetic Products

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Can any of the company-specific risk be diversified away by investing in both AGP and Synthetic Products 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 Synthetic Products into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AGP and Synthetic Products Enterprises, you can compare the effects of market volatilities on AGP and Synthetic Products 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 Synthetic Products. Check out your portfolio center. Please also check ongoing floating volatility patterns of AGP and Synthetic Products.

Diversification Opportunities for AGP and Synthetic Products

AGPSyntheticDiversified AwayAGPSyntheticDiversified Away100%
0.44
  Correlation Coefficient

Very weak diversification

The 3 months correlation between AGP and Synthetic is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding AGP and Synthetic Products Enterprises in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Synthetic Products 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 Synthetic Products. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Synthetic Products has no effect on the direction of AGP i.e., AGP and Synthetic Products go up and down completely randomly.

Pair Corralation between AGP and Synthetic Products

Assuming the 90 days trading horizon AGP is expected to generate 2.35 times less return on investment than Synthetic Products. But when comparing it to its historical volatility, AGP is 1.71 times less risky than Synthetic Products. It trades about 0.03 of its potential returns per unit of risk. Synthetic Products Enterprises is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  3,981  in Synthetic Products Enterprises on November 19, 2024 and sell it today you would earn a total of  152.00  from holding Synthetic Products Enterprises or generate 3.82% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

AGP  vs.  Synthetic Products Enterprises

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb -20-1001020
JavaScript chart by amCharts 3.21.15AGP SPEL
       Timeline  
AGP 

Risk-Adjusted Performance

Weak

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in AGP are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, AGP is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb150160170180190
Synthetic Products 

Risk-Adjusted Performance

Weak

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Synthetic Products Enterprises are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Synthetic Products may actually be approaching a critical reversion point that can send shares even higher in March 2025.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb3540455055

AGP and Synthetic Products Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-8.64-6.47-4.3-2.130.03622.154.386.68.8311.05 0.0200.0250.0300.0350.0400.0450.050
JavaScript chart by amCharts 3.21.15AGP SPEL
       Returns  

Pair Trading with AGP and Synthetic Products

The main advantage of trading using opposite AGP and Synthetic Products positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AGP position performs unexpectedly, Synthetic Products 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 Synthetic Products will offset losses from the drop in Synthetic Products' long position.
The idea behind AGP and Synthetic Products Enterprises 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 CEOs Directory module to screen CEOs from public companies around the world.

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