Correlation Between Matrix Service and Agrify Corp

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

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

Diversification Opportunities for Matrix Service and Agrify Corp

0.64

Correlation Coefficient

Matrix Service  Agrify Corp

Poor diversification

The 3 months correlation between Matrix and Agrify is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Matrix Service Co and Agrify Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Agrify Corp and Matrix Service 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 Matrix Service Co are associated (or correlated) with Agrify Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Agrify Corp has no effect on the direction of Matrix Service i.e., Matrix Service and Agrify Corp go up and down completely randomly.

Pair Corralation between Matrix Service and Agrify Corp

Given the investment horizon of 90 days Matrix Service is expected to generate 1.46 times less return on investment than Agrify Corp. But when comparing it to its historical volatility, Matrix Service Co is 3.39 times less risky than Agrify Corp. It trades about 0.07 of its potential returns per unit of risk. Agrify Corp is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  25,230  in Agrify Corp on September 2, 2024 and sell it today you would lose (19,555) from holding Agrify Corp or give up 77.51% of portfolio value over 90 days.

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

Matrix Service Co  vs.  Agrify Corp

Matrix Service

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Matrix Service Co are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady basic indicators, Matrix Service showed solid returns over the last few months and may actually be approaching a breakup point.

Agrify Corp

Risk-Adjusted Performance

26 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Agrify Corp are ranked lower than 26 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile technical and fundamental indicators, Agrify Corp showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Matrix Service and Agrify Corp

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

The idea behind Matrix Service Co and Agrify Corp 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.