Correlation Between Agro Tech and Styrenix Performance

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

By analyzing existing cross correlation between Agro Tech Foods and Styrenix Performance Materials, you can compare the effects of market volatilities on Agro Tech and Styrenix Performance 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 Agro Tech with a short position of Styrenix Performance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Agro Tech and Styrenix Performance.

Diversification Opportunities for Agro Tech and Styrenix Performance

0.27

Correlation Coefficient

Agro Tech  Styrenix Performance

Modest diversification

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

Pair Corralation between Agro Tech and Styrenix Performance

Assuming the 90 days trading horizon Agro Tech is expected to generate 1.94 times less return on investment than Styrenix Performance. In addition to that, Agro Tech is 1.42 times more volatile than Styrenix Performance Materials. It trades about 0.05 of its total potential returns per unit of risk. Styrenix Performance Materials is currently generating about 0.13 per unit of volatility. If you would invest  251,523  in Styrenix Performance Materials on September 22, 2024 and sell it today you would earn a total of  47,042  from holding Styrenix Performance Materials or generate 18.7% return on investment over 90 days.

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

Agro Tech Foods  vs.  Styrenix Performance Materials

Agro Tech Foods

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Agro Tech Foods are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Agro Tech may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Styrenix Performance

Risk-Adjusted Performance

10 of 100

OK

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

Pair Trading with Agro Tech and Styrenix Performance

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

The idea behind Agro Tech Foods and Styrenix Performance Materials 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.