Correlation Between Atlantic Sapphire and Village Farms

Can any of the company-specific risk be diversified away by investing in both Atlantic Sapphire and Village Farms 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 Village Farms 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 Village Farms International, you can compare the effects of market volatilities on Atlantic Sapphire and Village Farms 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 Village Farms. Check out your portfolio center. Please also check ongoing floating volatility patterns of Atlantic Sapphire and Village Farms.

Diversification Opportunities for Atlantic Sapphire and Village Farms

0.34

Correlation Coefficient

Atlantic Sapphire  Village Farms

Weak diversification

The 3 months correlation between Atlantic and Village is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Atlantic Sapphire ASA and Village Farms International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Village Farms Intern 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 Village Farms. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Village Farms Intern has no effect on the direction of Atlantic Sapphire i.e., Atlantic Sapphire and Village Farms go up and down completely randomly.

Pair Corralation between Atlantic Sapphire and Village Farms

Assuming the 90 days horizon Atlantic Sapphire ASA is expected to under-perform the Village Farms. In addition to that, Atlantic Sapphire is 4.04 times more volatile than Village Farms International. It trades about -0.01 of its total potential returns per unit of risk. Village Farms International is currently generating about 0.0 per unit of volatility. If you would invest  88.00  in Village Farms International on October 6, 2024 and sell it today you would lose (3.00) from holding Village Farms International or give up 3.41% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.41%
Values	Daily Returns

Atlantic Sapphire ASA  vs.  Village Farms International

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 latest weak performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Village Farms Intern

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Village Farms International has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, Village Farms is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Atlantic Sapphire and Village Farms

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

The idea behind Atlantic Sapphire ASA and Village Farms International 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.