Correlation Between Atlantic Sapphire and GrainCorp

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

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

Diversification Opportunities for Atlantic Sapphire and GrainCorp

0.56

Correlation Coefficient

Atlantic Sapphire  GrainCorp

Very weak diversification

The 3 months correlation between Atlantic and GrainCorp is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Atlantic Sapphire ASA and GrainCorp Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GrainCorp Limited and Atlantic Sapphire 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 Atlantic Sapphire ASA are associated (or correlated) with GrainCorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GrainCorp Limited has no effect on the direction of Atlantic Sapphire i.e., Atlantic Sapphire and GrainCorp go up and down completely randomly.

Pair Corralation between Atlantic Sapphire and GrainCorp

Assuming the 90 days horizon Atlantic Sapphire ASA is expected to under-perform the GrainCorp. In addition to that, Atlantic Sapphire is 5.29 times more volatile than GrainCorp Limited. It trades about -0.06 of its total potential returns per unit of risk. GrainCorp Limited is currently generating about -0.02 per unit of volatility. If you would invest  530.00  in GrainCorp Limited on September 15, 2024 and sell it today you would lose (105.00) from holding GrainCorp Limited or give up 19.81% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	99.21%
Values	Daily Returns

Atlantic Sapphire ASA  vs.  GrainCorp Limited

Atlantic Sapphire ASA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Atlantic Sapphire ASA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly weak basic indicators, Atlantic Sapphire may actually be approaching a critical reversion point that can send shares even higher in January 2025.

GrainCorp Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GrainCorp Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's essential indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Atlantic Sapphire and GrainCorp

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

The idea behind Atlantic Sapphire ASA and GrainCorp 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.