Correlation Between Agile Group and Hong Kong

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

By analyzing existing cross correlation between Agile Group Holdings and Hong Kong Land, you can compare the effects of market volatilities on Agile Group and Hong Kong 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 Agile Group with a short position of Hong Kong. Check out your portfolio center. Please also check ongoing floating volatility patterns of Agile Group and Hong Kong.

Diversification Opportunities for Agile Group and Hong Kong

0.26

Correlation Coefficient

Agile Group  Hong Kong

Modest diversification

The 3 months correlation between Agile and Hong is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Agile Group Holdings and Hong Kong Land in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hong Kong Land and Agile Group 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 Agile Group Holdings are associated (or correlated) with Hong Kong. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hong Kong Land has no effect on the direction of Agile Group i.e., Agile Group and Hong Kong go up and down completely randomly.

Pair Corralation between Agile Group and Hong Kong

Assuming the 90 days horizon Agile Group Holdings is expected to generate 9.66 times more return on investment than Hong Kong. However, Agile Group is 9.66 times more volatile than Hong Kong Land. It trades about 0.02 of its potential returns per unit of risk. Hong Kong Land is currently generating about 0.02 per unit of risk. If you would invest  1,612  in Agile Group Holdings on September 5, 2024 and sell it today you would lose (1,122) from holding Agile Group Holdings or give up 69.6% of portfolio value over 90 days.

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

Agile Group Holdings  vs.  Hong Kong Land

Agile Group Holdings

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Agile Group Holdings are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly inconsistent basic indicators, Agile Group showed solid returns over the last few months and may actually be approaching a breakup point.

Hong Kong Land

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Hong Kong Land are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly inconsistent forward-looking signals, Hong Kong showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Agile Group and Hong Kong

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

The idea behind Agile Group Holdings and Hong Kong Land 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.

Check out your portfolio center.

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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.