Correlation Between Agritech and Loads

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

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

Diversification Opportunities for Agritech and Loads

0.43

Correlation Coefficient

Agritech  Loads

Very weak diversification

The 3 months correlation between Agritech and Loads is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Agritech and Loads in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Loads and Agritech 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 Agritech are associated (or correlated) with Loads. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Loads has no effect on the direction of Agritech i.e., Agritech and Loads go up and down completely randomly.

Pair Corralation between Agritech and Loads

Assuming the 90 days trading horizon Agritech is expected to generate 13.84 times less return on investment than Loads. But when comparing it to its historical volatility, Agritech is 2.34 times less risky than Loads. It trades about 0.04 of its potential returns per unit of risk. Loads is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest  1,025  in Loads on September 27, 2024 and sell it today you would earn a total of  463.00  from holding Loads or generate 45.17% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	97.73%
Values	Daily Returns

Agritech  vs.  Loads

Agritech

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Agritech are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Agritech reported solid returns over the last few months and may actually be approaching a breakup point.

Loads

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Loads are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, Loads disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Agritech and Loads

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

The idea behind Agritech and Loads 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..