Correlation Between Adecoagro and Farm Lands

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

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

Diversification Opportunities for Adecoagro and Farm Lands

0.0

Correlation Coefficient

Adecoagro  Farm Lands

Pay attention - limited upside

The 3 months correlation between Adecoagro and Farm is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Adecoagro SA and Farm Lands of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Farm Lands and Adecoagro 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 Adecoagro SA are associated (or correlated) with Farm Lands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Farm Lands has no effect on the direction of Adecoagro i.e., Adecoagro and Farm Lands go up and down completely randomly.

Pair Corralation between Adecoagro and Farm Lands

If you would invest  946.00  in Adecoagro SA on December 26, 2024 and sell it today you would earn a total of  158.00  from holding Adecoagro SA or generate 16.7% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	95.24%
Values	Daily Returns

Adecoagro SA  vs.  Farm Lands of

Adecoagro SA

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Adecoagro SA are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Adecoagro displayed solid returns over the last few months and may actually be approaching a breakup point.

Farm Lands

Risk-Adjusted Performance

Very Weak

Over the last 90 days Farm Lands of has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Farm Lands is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Adecoagro and Farm Lands

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

The idea behind Adecoagro SA and Farm Lands of 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.

Check out your portfolio center.

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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.