Correlation Between Agro Tech and Hybrid Financial

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

By analyzing existing cross correlation between Agro Tech Foods and Hybrid Financial Services, you can compare the effects of market volatilities on Agro Tech and Hybrid Financial 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 Agro Tech with a short position of Hybrid Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Agro Tech and Hybrid Financial.

Diversification Opportunities for Agro Tech and Hybrid Financial

0.65

Correlation Coefficient

Agro Tech  Hybrid Financial

Poor diversification

The 3 months correlation between Agro and Hybrid is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Agro Tech Foods and Hybrid Financial Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hybrid Financial Services and Agro Tech 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 Agro Tech Foods are associated (or correlated) with Hybrid Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hybrid Financial Services has no effect on the direction of Agro Tech i.e., Agro Tech and Hybrid Financial go up and down completely randomly.

Pair Corralation between Agro Tech and Hybrid Financial

Assuming the 90 days trading horizon Agro Tech Foods is expected to generate 0.72 times more return on investment than Hybrid Financial. However, Agro Tech Foods is 1.39 times less risky than Hybrid Financial. It trades about -0.14 of its potential returns per unit of risk. Hybrid Financial Services is currently generating about -0.18 per unit of risk. If you would invest  90,590  in Agro Tech Foods on December 30, 2024 and sell it today you would lose (15,125) from holding Agro Tech Foods or give up 16.7% of portfolio value over 90 days.

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

Agro Tech Foods  vs.  Hybrid Financial Services

Agro Tech Foods

Risk-Adjusted Performance

Very Weak

Over the last 90 days Agro Tech Foods has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of conflicting performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Hybrid Financial Services

Risk-Adjusted Performance

Very Weak

Over the last 90 days Hybrid Financial Services has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent performance in the last few months, the Stock's technical and fundamental indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Agro Tech and Hybrid Financial

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

The idea behind Agro Tech Foods and Hybrid Financial Services 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.