Correlation Between Agrify Corp and Advantest

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

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

Diversification Opportunities for Agrify Corp and Advantest

0.64

Correlation Coefficient

Agrify Corp  Advantest

Poor diversification

The 3 months correlation between Agrify and Advantest is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Agrify Corp and Advantest in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Advantest and Agrify Corp 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 Agrify Corp are associated (or correlated) with Advantest. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Advantest has no effect on the direction of Agrify Corp i.e., Agrify Corp and Advantest go up and down completely randomly.

Pair Corralation between Agrify Corp and Advantest

Given the investment horizon of 90 days Agrify Corp is expected to generate 5.96 times more return on investment than Advantest. However, Agrify Corp is 5.96 times more volatile than Advantest. It trades about 0.27 of its potential returns per unit of risk. Advantest is currently generating about 0.22 per unit of risk. If you would invest  365.00  in Agrify Corp on September 5, 2024 and sell it today you would earn a total of  2,877  from holding Agrify Corp or generate 788.22% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.41%
Values	Daily Returns

Agrify Corp  vs.  Advantest

Agrify Corp

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Agrify Corp are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile technical and fundamental indicators, Agrify Corp showed solid returns over the last few months and may actually be approaching a breakup point.

Advantest

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Advantest are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Advantest reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Agrify Corp and Advantest

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

The idea behind Agrify Corp and Advantest 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.