Correlation Between Landsea Homes and AGBA Acquisition

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

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

Diversification Opportunities for Landsea Homes and AGBA Acquisition

0.18

Correlation Coefficient

Landsea Homes  AGBA Acquisition

Average diversification

The 3 months correlation between Landsea and AGBA is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Landsea Homes and AGBA Acquisition Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AGBA Acquisition and Landsea Homes 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 Landsea Homes are associated (or correlated) with AGBA Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AGBA Acquisition has no effect on the direction of Landsea Homes i.e., Landsea Homes and AGBA Acquisition go up and down completely randomly.

Pair Corralation between Landsea Homes and AGBA Acquisition

Assuming the 90 days horizon Landsea Homes is expected to generate 0.79 times more return on investment than AGBA Acquisition. However, Landsea Homes is 1.27 times less risky than AGBA Acquisition. It trades about -0.01 of its potential returns per unit of risk. AGBA Acquisition Limited is currently generating about -0.02 per unit of risk. If you would invest  27.00  in Landsea Homes on September 3, 2024 and sell it today you would lose (6.00) from holding Landsea Homes or give up 22.22% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	51.56%
Values	Daily Returns

Landsea Homes  vs.  AGBA Acquisition Limited

Landsea Homes

Risk-Adjusted Performance

0 of 100

Very Weak

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

AGBA Acquisition

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AGBA Acquisition Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Landsea Homes and AGBA Acquisition

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

The idea behind Landsea Homes and AGBA Acquisition 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.

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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.