Correlation Between AGF Management and Starfleet Innotech

Can any of the company-specific risk be diversified away by investing in both AGF Management and Starfleet Innotech 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 Starfleet Innotech 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 Starfleet Innotech, you can compare the effects of market volatilities on AGF Management and Starfleet Innotech 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 Starfleet Innotech. Check out your portfolio center. Please also check ongoing floating volatility patterns of AGF Management and Starfleet Innotech.

Diversification Opportunities for AGF Management and Starfleet Innotech

0.27

Correlation Coefficient

AGF Management  Starfleet Innotech

Modest diversification

The 3 months correlation between AGF and Starfleet is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding AGF Management Limited and Starfleet Innotech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Starfleet Innotech 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 Starfleet Innotech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Starfleet Innotech has no effect on the direction of AGF Management i.e., AGF Management and Starfleet Innotech go up and down completely randomly.

Pair Corralation between AGF Management and Starfleet Innotech

Assuming the 90 days horizon AGF Management is expected to generate 4.61 times less return on investment than Starfleet Innotech. But when comparing it to its historical volatility, AGF Management Limited is 9.0 times less risky than Starfleet Innotech. It trades about 0.25 of its potential returns per unit of risk. Starfleet Innotech is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  0.20  in Starfleet Innotech on August 30, 2024 and sell it today you would earn a total of  0.13  from holding Starfleet Innotech or generate 65.0% return on investment over 90 days.

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

AGF Management Limited  vs.  Starfleet Innotech

AGF Management

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in AGF Management Limited are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak primary indicators, AGF Management reported solid returns over the last few months and may actually be approaching a breakup point.

Starfleet Innotech

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Starfleet Innotech are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very fragile forward indicators, Starfleet Innotech displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with AGF Management and Starfleet Innotech

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

The idea behind AGF Management Limited and Starfleet Innotech 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..