Correlation Between Solana and AGI

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Can any of the company-specific risk be diversified away by investing in both Solana and AGI 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 Solana and AGI into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Solana and AGI, you can compare the effects of market volatilities on Solana and AGI 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 Solana with a short position of AGI. Check out your portfolio center. Please also check ongoing floating volatility patterns of Solana and AGI.

Diversification Opportunities for Solana and AGI

0.61
  Correlation Coefficient

Poor diversification

The 3 months correlation between Solana and AGI is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Solana and AGI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AGI and Solana 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 Solana are associated (or correlated) with AGI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AGI has no effect on the direction of Solana i.e., Solana and AGI go up and down completely randomly.

Pair Corralation between Solana and AGI

Assuming the 90 days trading horizon Solana is expected to under-perform the AGI. In addition to that, Solana is 1.36 times more volatile than AGI. It trades about -0.01 of its total potential returns per unit of risk. AGI is currently generating about 0.59 per unit of volatility. If you would invest  3.80  in AGI on May 18, 2022 and sell it today you would earn a total of  2.37  from holding AGI or generate 62.37% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Solana  vs.  AGI

 Performance (%) 
       Timeline  
Solana 
Solana Performance
0 of 100
Over the last 90 days Solana has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Solana is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Solana Price Channel

AGI 
AGI Performance
0 of 100
Over the last 90 days AGI has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong technical and fundamental indicators, AGI is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

AGI Price Channel

Solana and AGI Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Solana and AGI

The main advantage of trading using opposite Solana and AGI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Solana position performs unexpectedly, AGI 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 AGI will offset losses from the drop in AGI's long position.
The idea behind Solana and AGI 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.

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