Correlation Between AdCapital and Freshpet

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

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

Diversification Opportunities for AdCapital and Freshpet

-0.76

Correlation Coefficient

AdCapital  Freshpet

Pay attention - limited upside

The 3 months correlation between AdCapital and Freshpet is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding AdCapital AG and Freshpet in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Freshpet and AdCapital 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 AdCapital AG are associated (or correlated) with Freshpet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Freshpet has no effect on the direction of AdCapital i.e., AdCapital and Freshpet go up and down completely randomly.

Pair Corralation between AdCapital and Freshpet

Assuming the 90 days horizon AdCapital AG is expected to under-perform the Freshpet. But the stock apears to be less risky and, when comparing its historical volatility, AdCapital AG is 1.19 times less risky than Freshpet. The stock trades about -0.06 of its potential returns per unit of risk. The Freshpet is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  11,945  in Freshpet on September 23, 2024 and sell it today you would earn a total of  1,555  from holding Freshpet or generate 13.02% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

AdCapital AG  vs.  Freshpet

AdCapital AG

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AdCapital AG 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 basic 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.

Freshpet

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Freshpet are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Freshpet is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with AdCapital and Freshpet

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

The idea behind AdCapital AG and Freshpet 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.