Correlation Between AGF Management and EVS Broadcast

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

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

Diversification Opportunities for AGF Management and EVS Broadcast

-0.52

Correlation Coefficient

AGF Management  EVS Broadcast

Excellent diversification

The 3 months correlation between AGF and EVS is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding AGF Management Limited and EVS Broadcast Equipment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EVS Broadcast Equipment and AGF Management 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 AGF Management Limited are associated (or correlated) with EVS Broadcast. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EVS Broadcast Equipment has no effect on the direction of AGF Management i.e., AGF Management and EVS Broadcast go up and down completely randomly.

Pair Corralation between AGF Management and EVS Broadcast

Assuming the 90 days horizon AGF Management Limited is expected to generate 1.98 times more return on investment than EVS Broadcast. However, AGF Management is 1.98 times more volatile than EVS Broadcast Equipment. It trades about 0.27 of its potential returns per unit of risk. EVS Broadcast Equipment is currently generating about -0.04 per unit of risk. If you would invest  516.00  in AGF Management Limited on August 31, 2024 and sell it today you would earn a total of  219.00  from holding AGF Management Limited or generate 42.44% return on investment over 90 days.

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

AGF Management Limited  vs.  EVS Broadcast Equipment

AGF Management

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in AGF Management Limited are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, AGF Management reported solid returns over the last few months and may actually be approaching a breakup point.

EVS Broadcast Equipment

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days EVS Broadcast Equipment has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, EVS Broadcast is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with AGF Management and EVS Broadcast

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

The idea behind AGF Management Limited and EVS Broadcast Equipment 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.