Correlation Between Trinity Biotech and Agilent Technologies

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

Diversification Opportunities for Trinity Biotech and Agilent Technologies

0.68
  Correlation Coefficient

Poor diversification

The 3 months correlation between Trinity and Agilent is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Trinity Biotech Plc and Agilent Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Agilent Technologies and Trinity Biotech 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 Trinity Biotech Plc are associated (or correlated) with Agilent Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Agilent Technologies has no effect on the direction of Trinity Biotech i.e., Trinity Biotech and Agilent Technologies go up and down completely randomly.

Pair Corralation between Trinity Biotech and Agilent Technologies

Given the investment horizon of 90 days Trinity Biotech is expected to generate 1.31 times less return on investment than Agilent Technologies. In addition to that, Trinity Biotech is 1.41 times more volatile than Agilent Technologies. It trades about 0.08 of its total potential returns per unit of risk. Agilent Technologies is currently generating about 0.15 per unit of volatility. If you would invest  12,779  in Agilent Technologies on September 2, 2022 and sell it today you would earn a total of  2,719  from holding Agilent Technologies or generate 21.28% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy98.39%
ValuesDaily Returns

Trinity Biotech Plc  vs.  Agilent Technologies

 Performance (%) 
       Timeline  
Trinity Biotech Plc 
Trinity Performance
6 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Trinity Biotech Plc are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat conflicting forward indicators, Trinity Biotech sustained solid returns over the last few months and may actually be approaching a breakup point.

Trinity Price Channel

Agilent Technologies 
Agilent Performance
11 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Agilent Technologies are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, Agilent Technologies sustained solid returns over the last few months and may actually be approaching a breakup point.

Agilent Price Channel

Trinity Biotech and Agilent Technologies Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Trinity Biotech and Agilent Technologies

The main advantage of trading using opposite Trinity Biotech and Agilent Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Trinity Biotech position performs unexpectedly, Agilent Technologies 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 Agilent Technologies will offset losses from the drop in Agilent Technologies' long position.
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The idea behind Trinity Biotech Plc and Agilent Technologies 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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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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.

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