Correlation Between United States and Agrometal SAI

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

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

Diversification Opportunities for United States and Agrometal SAI

-0.16

Correlation Coefficient

United States  Agrometal SAI

Good diversification

The 3 months correlation between United and Agrometal is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding United States Steel and Agrometal SAI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Agrometal SAI and United States 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 United States Steel are associated (or correlated) with Agrometal SAI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Agrometal SAI has no effect on the direction of United States i.e., United States and Agrometal SAI go up and down completely randomly.

Pair Corralation between United States and Agrometal SAI

Given the investment horizon of 90 days United States Steel is expected to under-perform the Agrometal SAI. In addition to that, United States is 1.32 times more volatile than Agrometal SAI. It trades about -0.02 of its total potential returns per unit of risk. Agrometal SAI is currently generating about 0.14 per unit of volatility. If you would invest  5,660  in Agrometal SAI on August 30, 2024 and sell it today you would earn a total of  1,390  from holding Agrometal SAI or generate 24.56% return on investment over 90 days.

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

United States Steel  vs.  Agrometal SAI

United States Steel

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days United States Steel has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental drivers, United States is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Agrometal SAI

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Agrometal SAI are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Agrometal SAI sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with United States and Agrometal SAI

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

The idea behind United States Steel and Agrometal SAI 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.