Correlation Between Archer Daniels and SLC Agricola

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

By analyzing existing cross correlation between Archer Daniels Midland and SLC Agricola SA, you can compare the effects of market volatilities on Archer Daniels and SLC Agricola 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 Archer Daniels with a short position of SLC Agricola. Check out your portfolio center. Please also check ongoing floating volatility patterns of Archer Daniels and SLC Agricola.

Diversification Opportunities for Archer Daniels and SLC Agricola

0.59

Correlation Coefficient

Archer Daniels  SLC Agricola

Very weak diversification

The 3 months correlation between Archer and SLC is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Archer Daniels Midland and SLC Agricola SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SLC Agricola SA and Archer Daniels 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 Archer Daniels Midland are associated (or correlated) with SLC Agricola. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SLC Agricola SA has no effect on the direction of Archer Daniels i.e., Archer Daniels and SLC Agricola go up and down completely randomly.

Pair Corralation between Archer Daniels and SLC Agricola

Considering the 90-day investment horizon Archer Daniels Midland is expected to under-perform the SLC Agricola. But the stock apears to be less risky and, when comparing its historical volatility, Archer Daniels Midland is 11.29 times less risky than SLC Agricola. The stock trades about -0.05 of its potential returns per unit of risk. The SLC Agricola SA is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  347.00  in SLC Agricola SA on September 14, 2024 and sell it today you would lose (35.00) from holding SLC Agricola SA or give up 10.09% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.58%
Values	Daily Returns

Archer Daniels Midland  vs.  SLC Agricola SA

Archer Daniels Midland

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Archer Daniels Midland has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's fundamental indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

SLC Agricola SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SLC Agricola SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong forward-looking indicators, SLC Agricola is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Archer Daniels and SLC Agricola

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

The idea behind Archer Daniels Midland and SLC Agricola SA 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.