Correlation Between A2 Milk and Forafric Global

Can any of the company-specific risk be diversified away by investing in both A2 Milk and Forafric Global 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 A2 Milk and Forafric Global into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between The A2 Milk and Forafric Global PLC, you can compare the effects of market volatilities on A2 Milk and Forafric Global 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 A2 Milk with a short position of Forafric Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of A2 Milk and Forafric Global.

Diversification Opportunities for A2 Milk and Forafric Global

-0.57

Correlation Coefficient

A2 Milk  Forafric Global

Excellent diversification

The 3 months correlation between ACOPY and Forafric is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding The A2 Milk and Forafric Global PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Forafric Global PLC and A2 Milk 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 The A2 Milk are associated (or correlated) with Forafric Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Forafric Global PLC has no effect on the direction of A2 Milk i.e., A2 Milk and Forafric Global go up and down completely randomly.

Pair Corralation between A2 Milk and Forafric Global

Assuming the 90 days horizon The A2 Milk is expected to generate 0.41 times more return on investment than Forafric Global. However, The A2 Milk is 2.47 times less risky than Forafric Global. It trades about 0.23 of its potential returns per unit of risk. Forafric Global PLC is currently generating about -0.06 per unit of risk. If you would invest  334.00  in The A2 Milk on December 27, 2024 and sell it today you would earn a total of  203.00  from holding The A2 Milk or generate 60.78% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	86.89%
Values	Daily Returns

The A2 Milk  vs.  Forafric Global PLC

A2 Milk

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in The A2 Milk are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, A2 Milk showed solid returns over the last few months and may actually be approaching a breakup point.

Forafric Global PLC

Risk-Adjusted Performance

Very Weak

Over the last 90 days Forafric Global PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's forward indicators remain fairly stable which may send shares a bit higher in April 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with A2 Milk and Forafric Global

The main advantage of trading using opposite A2 Milk and Forafric Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if A2 Milk position performs unexpectedly, Forafric Global 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 Forafric Global will offset losses from the drop in Forafric Global's long position.

The idea behind The A2 Milk and Forafric Global PLC 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.