Correlation Between Adecoagro and Mowi ASA

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

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

Diversification Opportunities for Adecoagro and Mowi ASA

0.04

Correlation Coefficient

Adecoagro  Mowi ASA

Significant diversification

The 3 months correlation between Adecoagro and Mowi is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Adecoagro SA and Mowi ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mowi ASA 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 Mowi ASA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mowi ASA has no effect on the direction of Adecoagro i.e., Adecoagro and Mowi ASA go up and down completely randomly.

Pair Corralation between Adecoagro and Mowi ASA

Given the investment horizon of 90 days Adecoagro SA is expected to generate 0.69 times more return on investment than Mowi ASA. However, Adecoagro SA is 1.45 times less risky than Mowi ASA. It trades about 0.12 of its potential returns per unit of risk. Mowi ASA is currently generating about 0.05 per unit of risk. If you would invest  962.00  in Adecoagro SA on December 20, 2024 and sell it today you would earn a total of  128.00  from holding Adecoagro SA or generate 13.31% return on investment over 90 days.

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

Adecoagro SA  vs.  Mowi ASA

Adecoagro SA

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Adecoagro SA are ranked lower than 9 (%) 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.

Mowi ASA

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Mowi ASA are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Mowi ASA may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Adecoagro and Mowi ASA

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

The idea behind Adecoagro SA and Mowi ASA 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.