Correlation Between Associated Capital and Agriculture Natural

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

By analyzing existing cross correlation between Associated Capital Group and Agriculture Natural Solutions, you can compare the effects of market volatilities on Associated Capital and Agriculture Natural 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 Associated Capital with a short position of Agriculture Natural. Check out your portfolio center. Please also check ongoing floating volatility patterns of Associated Capital and Agriculture Natural.

Diversification Opportunities for Associated Capital and Agriculture Natural

0.84

Correlation Coefficient

Associated Capital  Agriculture Natural

Very poor diversification

The 3 months correlation between Associated and Agriculture is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Associated Capital Group and Agriculture Natural Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Agriculture Natural and Associated Capital 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 Associated Capital Group are associated (or correlated) with Agriculture Natural. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Agriculture Natural has no effect on the direction of Associated Capital i.e., Associated Capital and Agriculture Natural go up and down completely randomly.

Pair Corralation between Associated Capital and Agriculture Natural

Allowing for the 90-day total investment horizon Associated Capital is expected to generate 5.62 times less return on investment than Agriculture Natural. But when comparing it to its historical volatility, Associated Capital Group is 5.18 times less risky than Agriculture Natural. It trades about 0.12 of its potential returns per unit of risk. Agriculture Natural Solutions is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  17.00  in Agriculture Natural Solutions on September 3, 2024 and sell it today you would earn a total of  8.00  from holding Agriculture Natural Solutions or generate 47.06% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	79.69%
Values	Daily Returns

Associated Capital Group  vs.  Agriculture Natural Solutions

Associated Capital

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Associated Capital Group are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile fundamental indicators, Associated Capital exhibited solid returns over the last few months and may actually be approaching a breakup point.

Agriculture Natural

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Agriculture Natural Solutions are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating fundamental indicators, Agriculture Natural showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Associated Capital and Agriculture Natural

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

The idea behind Associated Capital Group and Agriculture Natural Solutions 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.