Correlation Between Eddy Smart and AGF Management

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

By analyzing existing cross correlation between Eddy Smart Home and AGF Management Limited, you can compare the effects of market volatilities on Eddy Smart and AGF Management 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 Eddy Smart with a short position of AGF Management. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eddy Smart and AGF Management.

Diversification Opportunities for Eddy Smart and AGF Management

0.06

Correlation Coefficient

Eddy Smart  AGF Management

Significant diversification

The 3 months correlation between Eddy and AGF is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Eddy Smart Home and AGF Management Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AGF Management and Eddy Smart 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 Eddy Smart Home are associated (or correlated) with AGF Management. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AGF Management has no effect on the direction of Eddy Smart i.e., Eddy Smart and AGF Management go up and down completely randomly.

Pair Corralation between Eddy Smart and AGF Management

Assuming the 90 days horizon Eddy Smart Home is expected to generate 3.44 times more return on investment than AGF Management. However, Eddy Smart is 3.44 times more volatile than AGF Management Limited. It trades about 0.05 of its potential returns per unit of risk. AGF Management Limited is currently generating about -0.03 per unit of risk. If you would invest  230.00  in Eddy Smart Home on December 28, 2024 and sell it today you would earn a total of  20.00  from holding Eddy Smart Home or generate 8.7% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

Eddy Smart Home  vs.  AGF Management Limited

Eddy Smart Home

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Eddy Smart Home are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Eddy Smart showed solid returns over the last few months and may actually be approaching a breakup point.

AGF Management

Risk-Adjusted Performance

Very Weak

Over the last 90 days AGF Management Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, AGF Management is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Eddy Smart and AGF Management

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

The idea behind Eddy Smart Home and AGF Management Limited 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.