Correlation Between Wisher Industrial and AGV Products

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

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

Diversification Opportunities for Wisher Industrial and AGV Products

0.24

Correlation Coefficient

Wisher Industrial  AGV Products

Modest diversification

The 3 months correlation between Wisher and AGV is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Wisher Industrial Co and AGV Products Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AGV Products Corp and Wisher Industrial 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 Wisher Industrial Co are associated (or correlated) with AGV Products. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AGV Products Corp has no effect on the direction of Wisher Industrial i.e., Wisher Industrial and AGV Products go up and down completely randomly.

Pair Corralation between Wisher Industrial and AGV Products

Assuming the 90 days trading horizon Wisher Industrial Co is expected to under-perform the AGV Products. In addition to that, Wisher Industrial is 1.4 times more volatile than AGV Products Corp. It trades about -0.06 of its total potential returns per unit of risk. AGV Products Corp is currently generating about -0.08 per unit of volatility. If you would invest  1,240  in AGV Products Corp on August 31, 2024 and sell it today you would lose (50.00) from holding AGV Products Corp or give up 4.03% of portfolio value over 90 days.

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

Wisher Industrial Co  vs.  AGV Products Corp

Wisher Industrial

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Wisher Industrial Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Wisher Industrial is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

AGV Products Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AGV Products Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, AGV Products is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Wisher Industrial and AGV Products

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

The idea behind Wisher Industrial Co and AGV Products Corp 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..