Correlation Between Techno Agricultural and AgriBank Securities

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

By analyzing existing cross correlation between Techno Agricultural Supplying and AgriBank Securities JSC, you can compare the effects of market volatilities on Techno Agricultural and AgriBank Securities 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 Techno Agricultural with a short position of AgriBank Securities. Check out your portfolio center. Please also check ongoing floating volatility patterns of Techno Agricultural and AgriBank Securities.

Diversification Opportunities for Techno Agricultural and AgriBank Securities

0.79

Correlation Coefficient

Techno Agricultural  AgriBank Securities

Poor diversification

The 3 months correlation between Techno and AgriBank is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Techno Agricultural Supplying and AgriBank Securities JSC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AgriBank Securities JSC and Techno Agricultural 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 Techno Agricultural Supplying are associated (or correlated) with AgriBank Securities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AgriBank Securities JSC has no effect on the direction of Techno Agricultural i.e., Techno Agricultural and AgriBank Securities go up and down completely randomly.

Pair Corralation between Techno Agricultural and AgriBank Securities

Assuming the 90 days trading horizon Techno Agricultural Supplying is expected to under-perform the AgriBank Securities. But the stock apears to be less risky and, when comparing its historical volatility, Techno Agricultural Supplying is 1.12 times less risky than AgriBank Securities. The stock trades about -0.02 of its potential returns per unit of risk. The AgriBank Securities JSC is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  751,896  in AgriBank Securities JSC on October 24, 2024 and sell it today you would earn a total of  873,104  from holding AgriBank Securities JSC or generate 116.12% return on investment over 90 days.

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

Techno Agricultural Supplying  vs.  AgriBank Securities JSC

Techno Agricultural

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Techno Agricultural Supplying has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's fundamental indicators remain very healthy which may send shares a bit higher in February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

AgriBank Securities JSC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AgriBank Securities JSC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Techno Agricultural and AgriBank Securities

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

The idea behind Techno Agricultural Supplying and AgriBank Securities JSC 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.