Correlation Between Agilysys and American Software
Can any of the company-specific risk be diversified away by investing in both Agilysys and American Software 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 Agilysys and American Software into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Agilysys and American Software, you can compare the effects of market volatilities on Agilysys and American Software 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 Agilysys with a short position of American Software. Check out your portfolio center. Please also check ongoing floating volatility patterns of Agilysys and American Software.
Diversification Opportunities for Agilysys and American Software
-0.03 | Correlation Coefficient |
Good diversification
The 3 months correlation between Agilysys and American is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Agilysys and American Software in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Software and Agilysys 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 Agilysys are associated (or correlated) with American Software. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Software has no effect on the direction of Agilysys i.e., Agilysys and American Software go up and down completely randomly.
Pair Corralation between Agilysys and American Software
Given the investment horizon of 90 days Agilysys is expected to generate 0.85 times more return on investment than American Software. However, Agilysys is 1.17 times less risky than American Software. It trades about 0.09 of its potential returns per unit of risk. American Software is currently generating about -0.19 per unit of risk. If you would invest 7,912 in Agilysys on January 20, 2024 and sell it today you would earn a total of 263.00 from holding Agilysys or generate 3.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Agilysys vs. American Software
Performance |
| Timeline |
| Agilysys |
| American Software |
Agilysys and American Software Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Agilysys and American Software
The main advantage of trading using opposite Agilysys and American Software positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Agilysys position performs unexpectedly, American Software 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 American Software will offset losses from the drop in American Software's long position.The idea behind Agilysys and American Software 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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