Correlation Between Forafric Global and Limoneira

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

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

Diversification Opportunities for Forafric Global and Limoneira

0.69

Correlation Coefficient

Forafric Global  Limoneira

Poor diversification

The 3 months correlation between Forafric and Limoneira is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Forafric Global PLC and Limoneira Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Limoneira and Forafric Global 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 Forafric Global PLC are associated (or correlated) with Limoneira. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Limoneira has no effect on the direction of Forafric Global i.e., Forafric Global and Limoneira go up and down completely randomly.

Pair Corralation between Forafric Global and Limoneira

Assuming the 90 days horizon Forafric Global PLC is expected to generate 4.6 times more return on investment than Limoneira. However, Forafric Global is 4.6 times more volatile than Limoneira Co. It trades about 0.02 of its potential returns per unit of risk. Limoneira Co is currently generating about -0.15 per unit of risk. If you would invest  103.00  in Forafric Global PLC on November 28, 2024 and sell it today you would lose (13.00) from holding Forafric Global PLC or give up 12.62% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	82.76%
Values	Daily Returns

Forafric Global PLC  vs.  Limoneira Co

Forafric Global PLC

Risk-Adjusted Performance

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Forafric Global PLC are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly inconsistent forward indicators, Forafric Global may actually be approaching a critical reversion point that can send shares even higher in March 2025.

Limoneira

Risk-Adjusted Performance

Very Weak

Over the last 90 days Limoneira Co has generated negative risk-adjusted returns adding no value to investors with long positions. Even with unsteady performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in March 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Forafric Global and Limoneira

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

The idea behind Forafric Global PLC and Limoneira Co 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.