Correlation Between Heidelberg Pharma and AGF Management

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

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

Diversification Opportunities for Heidelberg Pharma and AGF Management

-0.31

Correlation Coefficient

Heidelberg Pharma  AGF Management

Very good diversification

The 3 months correlation between Heidelberg and AGF is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Heidelberg Pharma AG and AGF Management Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AGF Management and Heidelberg Pharma 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 Heidelberg Pharma AG 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 Heidelberg Pharma i.e., Heidelberg Pharma and AGF Management go up and down completely randomly.

Pair Corralation between Heidelberg Pharma and AGF Management

Assuming the 90 days trading horizon Heidelberg Pharma AG is expected to under-perform the AGF Management. In addition to that, Heidelberg Pharma is 2.46 times more volatile than AGF Management Limited. It trades about -0.09 of its total potential returns per unit of risk. AGF Management Limited is currently generating about -0.13 per unit of volatility. If you would invest  730.00  in AGF Management Limited on October 10, 2024 and sell it today you would lose (20.00) from holding AGF Management Limited or give up 2.74% of portfolio value over 90 days.

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

Heidelberg Pharma AG  vs.  AGF Management Limited

Heidelberg Pharma

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Heidelberg Pharma AG has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Heidelberg Pharma is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

AGF Management

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in AGF Management Limited are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, AGF Management may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Heidelberg Pharma and AGF Management

The main advantage of trading using opposite Heidelberg Pharma and AGF Management positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Heidelberg Pharma 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 Heidelberg Pharma AG 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.

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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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.