Correlation Between Agilysys and Idex Biometrics

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

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

Diversification Opportunities for Agilysys and Idex Biometrics

-0.56

Correlation Coefficient

Agilysys  Idex Biometrics

Excellent diversification

The 3 months correlation between Agilysys and Idex is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Agilysys and Idex Biometrics ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Idex Biometrics ASA and Agilysys 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 Agilysys are associated (or correlated) with Idex Biometrics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Idex Biometrics ASA has no effect on the direction of Agilysys i.e., Agilysys and Idex Biometrics go up and down completely randomly.

Pair Corralation between Agilysys and Idex Biometrics

Given the investment horizon of 90 days Agilysys is expected to generate 0.58 times more return on investment than Idex Biometrics. However, Agilysys is 1.72 times less risky than Idex Biometrics. It trades about 0.06 of its potential returns per unit of risk. Idex Biometrics ASA is currently generating about -0.04 per unit of risk. If you would invest  7,598  in Agilysys on August 31, 2024 and sell it today you would earn a total of  5,832  from holding Agilysys or generate 76.76% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	28.45%
Values	Daily Returns

Agilysys  vs.  Idex Biometrics ASA

Agilysys

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Agilysys are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Agilysys unveiled solid returns over the last few months and may actually be approaching a breakup point.

Idex Biometrics ASA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Idex Biometrics ASA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental drivers, Idex Biometrics is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Agilysys and Idex Biometrics

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

The idea behind Agilysys and Idex Biometrics ASA 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.