Correlation Between Agro Tech and UTI Asset

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

Diversification Opportunities for Agro Tech and UTI Asset

0.46

Correlation Coefficient

Agro Tech  UTI Asset

Very weak diversification

The 3 months correlation between Agro and UTI is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Agro Tech Foods and UTI Asset Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UTI Asset Management 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 UTI Asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UTI Asset Management has no effect on the direction of Agro Tech i.e., Agro Tech and UTI Asset go up and down completely randomly.

Pair Corralation between Agro Tech and UTI Asset

Assuming the 90 days trading horizon Agro Tech Foods is expected to generate 1.25 times more return on investment than UTI Asset. However, Agro Tech is 1.25 times more volatile than UTI Asset Management. It trades about 0.06 of its potential returns per unit of risk. UTI Asset Management is currently generating about -0.01 per unit of risk. If you would invest  81,120  in Agro Tech Foods on September 24, 2024 and sell it today you would earn a total of  6,795  from holding Agro Tech Foods or generate 8.38% return on investment over 90 days.

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

Agro Tech Foods  vs.  UTI Asset Management

Agro Tech Foods

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Agro Tech Foods are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Agro Tech may actually be approaching a critical reversion point that can send shares even higher in January 2025.

UTI Asset Management

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days UTI Asset Management has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, UTI Asset is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Agro Tech and UTI Asset

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

The idea behind Agro Tech Foods and UTI Asset Management 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.