Correlation Between Vertex and Agilysys

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

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

Diversification Opportunities for Vertex and Agilysys

0.88

Correlation Coefficient

Vertex  Agilysys

Very poor diversification

The 3 months correlation between Vertex and Agilysys is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Vertex and Agilysys in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Agilysys and Vertex 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 Vertex are associated (or correlated) with Agilysys. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Agilysys has no effect on the direction of Vertex i.e., Vertex and Agilysys go up and down completely randomly.

Pair Corralation between Vertex and Agilysys

Given the investment horizon of 90 days Vertex is expected to under-perform the Agilysys. But the stock apears to be less risky and, when comparing its historical volatility, Vertex is 2.24 times less risky than Agilysys. The stock trades about -0.21 of its potential returns per unit of risk. The Agilysys is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest  13,364  in Agilysys on October 5, 2024 and sell it today you would lose (403.00) from holding Agilysys or give up 3.02% of portfolio value over 90 days.

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

Vertex  vs.  Agilysys

Vertex

Risk-Adjusted Performance

14 of 100

Good

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

Agilysys

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Agilysys are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Agilysys unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Vertex and Agilysys

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

The idea behind Vertex and Agilysys 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.