Correlation Between Agrometal SAI and Walmart

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

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

Diversification Opportunities for Agrometal SAI and Walmart

-0.36

Correlation Coefficient

Agrometal SAI  Walmart

Very good diversification

The 3 months correlation between Agrometal and Walmart is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Agrometal SAI and Walmart in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Walmart and Agrometal SAI 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 Agrometal SAI are associated (or correlated) with Walmart. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Walmart has no effect on the direction of Agrometal SAI i.e., Agrometal SAI and Walmart go up and down completely randomly.

Pair Corralation between Agrometal SAI and Walmart

Assuming the 90 days trading horizon Agrometal SAI is expected to under-perform the Walmart. In addition to that, Agrometal SAI is 1.89 times more volatile than Walmart. It trades about -0.11 of its total potential returns per unit of risk. Walmart is currently generating about 0.04 per unit of volatility. If you would invest  598,000  in Walmart on December 29, 2024 and sell it today you would earn a total of  22,000  from holding Walmart or generate 3.68% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.36%
Values	Daily Returns

Agrometal SAI  vs.  Walmart

Agrometal SAI

Risk-Adjusted Performance

Very Weak

Over the last 90 days Agrometal SAI has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Walmart

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Walmart are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Walmart is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Agrometal SAI and Walmart

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

The idea behind Agrometal SAI and Walmart 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.