Correlation Between Diamond Fields and AGF Management

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

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

Diversification Opportunities for Diamond Fields and AGF Management

0.13

Correlation Coefficient

Diamond Fields  AGF Management

Average diversification

The 3 months correlation between Diamond and AGF is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Diamond Fields Resources and AGF Management Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AGF Management and Diamond Fields 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 Diamond Fields Resources are associated (or correlated) with AGF Management. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AGF Management has no effect on the direction of Diamond Fields i.e., Diamond Fields and AGF Management go up and down completely randomly.

Pair Corralation between Diamond Fields and AGF Management

Assuming the 90 days horizon Diamond Fields is expected to generate 19.71 times less return on investment than AGF Management. In addition to that, Diamond Fields is 3.38 times more volatile than AGF Management Limited. It trades about 0.0 of its total potential returns per unit of risk. AGF Management Limited is currently generating about 0.27 per unit of volatility. If you would invest  782.00  in AGF Management Limited on September 3, 2024 and sell it today you would earn a total of  320.00  from holding AGF Management Limited or generate 40.92% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Diamond Fields Resources  vs.  AGF Management Limited

Diamond Fields Resources

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Diamond Fields Resources has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Diamond Fields is not utilizing all of its potentials. The recent stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

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. In spite of comparatively unfluctuating basic indicators, AGF Management unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Diamond Fields and AGF Management

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

The idea behind Diamond Fields Resources and AGF Management Limited 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.