Correlation Between THORNEY TECHS and Agilent Technologies

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

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

Diversification Opportunities for THORNEY TECHS and Agilent Technologies

-0.41

Correlation Coefficient

THORNEY TECHS  Agilent Technologies

Very good diversification

The 3 months correlation between THORNEY and Agilent is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding THORNEY TECHS LTD and Agilent Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Agilent Technologies and THORNEY TECHS 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 THORNEY TECHS LTD are associated (or correlated) with Agilent Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Agilent Technologies has no effect on the direction of THORNEY TECHS i.e., THORNEY TECHS and Agilent Technologies go up and down completely randomly.

Pair Corralation between THORNEY TECHS and Agilent Technologies

Assuming the 90 days horizon THORNEY TECHS LTD is expected to under-perform the Agilent Technologies. In addition to that, THORNEY TECHS is 2.86 times more volatile than Agilent Technologies. It trades about -0.01 of its total potential returns per unit of risk. Agilent Technologies is currently generating about 0.0 per unit of volatility. If you would invest  13,877  in Agilent Technologies on October 11, 2024 and sell it today you would lose (801.00) from holding Agilent Technologies or give up 5.77% of portfolio value over 90 days.

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

THORNEY TECHS LTD  vs.  Agilent Technologies

THORNEY TECHS LTD

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days THORNEY TECHS LTD has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, THORNEY TECHS is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Agilent Technologies

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Agilent Technologies are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Agilent Technologies is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with THORNEY TECHS and Agilent Technologies

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

The idea behind THORNEY TECHS LTD and Agilent Technologies 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.

Check out your portfolio center.

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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.