Correlation Between AGC and Akzo Nobel

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

By analyzing existing cross correlation between AGC Inc ADR and Akzo Nobel NV, you can compare the effects of market volatilities on AGC and Akzo Nobel 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 AGC with a short position of Akzo Nobel. Check out your portfolio center. Please also check ongoing floating volatility patterns of AGC and Akzo Nobel.

Diversification Opportunities for AGC and Akzo Nobel

0.22

Correlation Coefficient

AGC  Akzo Nobel

Modest diversification

The 3 months correlation between AGC and Akzo is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding AGC Inc ADR and Akzo Nobel NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Akzo Nobel NV and AGC 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 AGC Inc ADR are associated (or correlated) with Akzo Nobel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Akzo Nobel NV has no effect on the direction of AGC i.e., AGC and Akzo Nobel go up and down completely randomly.

Pair Corralation between AGC and Akzo Nobel

Assuming the 90 days horizon AGC Inc ADR is expected to generate 1.04 times more return on investment than Akzo Nobel. However, AGC is 1.04 times more volatile than Akzo Nobel NV. It trades about 0.05 of its potential returns per unit of risk. Akzo Nobel NV is currently generating about 0.02 per unit of risk. If you would invest  613.00  in AGC Inc ADR on September 1, 2024 and sell it today you would earn a total of  30.00  from holding AGC Inc ADR or generate 4.89% return on investment over 90 days.

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

AGC Inc ADR  vs.  Akzo Nobel NV

AGC Inc ADR

Risk-Adjusted Performance

3 of 100

Insignificant

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

Akzo Nobel NV

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Akzo Nobel NV are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Akzo Nobel is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with AGC and Akzo Nobel

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

The idea behind AGC Inc ADR and Akzo Nobel NV 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 Transaction History module to view history of all your transactions and understand their impact on performance.