Correlation Between PPG Industries and AGC

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

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

Diversification Opportunities for PPG Industries and AGC

0.59

Correlation Coefficient

PPG Industries  AGC

Very weak diversification

The 3 months correlation between PPG and AGC is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding PPG Industries and AGC Inc ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AGC Inc ADR and PPG Industries 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 PPG Industries are associated (or correlated) with AGC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AGC Inc ADR has no effect on the direction of PPG Industries i.e., PPG Industries and AGC go up and down completely randomly.

Pair Corralation between PPG Industries and AGC

Considering the 90-day investment horizon PPG Industries is expected to under-perform the AGC. But the stock apears to be less risky and, when comparing its historical volatility, PPG Industries is 2.3 times less risky than AGC. The stock trades about -0.06 of its potential returns per unit of risk. The AGC Inc ADR is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  691.00  in AGC Inc ADR on December 2, 2024 and sell it today you would lose (97.00) from holding AGC Inc ADR or give up 14.04% of portfolio value over 90 days.

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

PPG Industries  vs.  AGC Inc ADR

PPG Industries

Risk-Adjusted Performance

Very Weak

Over the last 90 days PPG Industries has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

AGC Inc ADR

Risk-Adjusted Performance

Very Weak

Over the last 90 days AGC Inc ADR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong essential indicators, AGC is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with PPG Industries and AGC

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

The idea behind PPG Industries and AGC Inc ADR 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.