Correlation Between Lucky Cement and AGP

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

By analyzing existing cross correlation between Lucky Cement and AGP, you can compare the effects of market volatilities on Lucky Cement and AGP 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 Lucky Cement with a short position of AGP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lucky Cement and AGP.

Diversification Opportunities for Lucky Cement and AGP

0.92

Correlation Coefficient

Lucky Cement  AGP

Almost no diversification

The 3 months correlation between Lucky and AGP is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Lucky Cement and AGP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AGP and Lucky Cement 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 Lucky Cement are associated (or correlated) with AGP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AGP has no effect on the direction of Lucky Cement i.e., Lucky Cement and AGP go up and down completely randomly.

Pair Corralation between Lucky Cement and AGP

Assuming the 90 days trading horizon Lucky Cement is expected to generate 1.32 times less return on investment than AGP. But when comparing it to its historical volatility, Lucky Cement is 1.2 times less risky than AGP. It trades about 0.17 of its potential returns per unit of risk. AGP is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  12,029  in AGP on October 15, 2024 and sell it today you would earn a total of  4,889  from holding AGP or generate 40.64% return on investment over 90 days.

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

Lucky Cement  vs.  AGP

Lucky Cement

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Lucky Cement are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Lucky Cement sustained solid returns over the last few months and may actually be approaching a breakup point.

AGP

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in AGP are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Even with relatively conflicting basic indicators, AGP reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Lucky Cement and AGP

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

The idea behind Lucky Cement and AGP 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.