Correlation Between Electrovaya Common and AGL Energy

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

By analyzing existing cross correlation between Electrovaya Common Shares and AGL Energy Limited, you can compare the effects of market volatilities on Electrovaya Common and AGL Energy 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 Electrovaya Common with a short position of AGL Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Electrovaya Common and AGL Energy.

Diversification Opportunities for Electrovaya Common and AGL Energy

0.68

Correlation Coefficient

Electrovaya Common  AGL Energy

Poor diversification

The 3 months correlation between Electrovaya and AGL is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Electrovaya Common Shares and AGL Energy Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AGL Energy Limited and Electrovaya Common 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 Electrovaya Common Shares are associated (or correlated) with AGL Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AGL Energy Limited has no effect on the direction of Electrovaya Common i.e., Electrovaya Common and AGL Energy go up and down completely randomly.

Pair Corralation between Electrovaya Common and AGL Energy

Given the investment horizon of 90 days Electrovaya Common Shares is expected to under-perform the AGL Energy. In addition to that, Electrovaya Common is 1.45 times more volatile than AGL Energy Limited. It trades about -0.01 of its total potential returns per unit of risk. AGL Energy Limited is currently generating about 0.05 per unit of volatility. If you would invest  537.00  in AGL Energy Limited on October 11, 2024 and sell it today you would earn a total of  168.00  from holding AGL Energy Limited or generate 31.28% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	55.76%
Values	Daily Returns

Electrovaya Common Shares  vs.  AGL Energy Limited

Electrovaya Common Shares

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Electrovaya Common Shares are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat fragile basic indicators, Electrovaya Common sustained solid returns over the last few months and may actually be approaching a breakup point.

AGL Energy Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AGL Energy Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, AGL Energy is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Electrovaya Common and AGL Energy

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

The idea behind Electrovaya Common Shares and AGL Energy 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..