Correlation Between Adecoagro and SalMar ASA

Can any of the company-specific risk be diversified away by investing in both Adecoagro and SalMar 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 SalMar 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 SalMar ASA, you can compare the effects of market volatilities on Adecoagro and SalMar 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 SalMar ASA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Adecoagro and SalMar ASA.

Diversification Opportunities for Adecoagro and SalMar ASA

0.31

Correlation Coefficient

Adecoagro  SalMar ASA

Weak diversification

The 3 months correlation between Adecoagro and SalMar is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Adecoagro SA and SalMar ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SalMar 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 SalMar ASA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SalMar ASA has no effect on the direction of Adecoagro i.e., Adecoagro and SalMar ASA go up and down completely randomly.

Pair Corralation between Adecoagro and SalMar ASA

Given the investment horizon of 90 days Adecoagro SA is expected to generate 0.71 times more return on investment than SalMar ASA. However, Adecoagro SA is 1.41 times less risky than SalMar ASA. It trades about 0.13 of its potential returns per unit of risk. SalMar ASA is currently generating about 0.06 per unit of risk. If you would invest  957.00  in Adecoagro SA on December 2, 2024 and sell it today you would earn a total of  111.00  from holding Adecoagro SA or generate 11.6% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	93.02%
Values	Daily Returns

Adecoagro SA  vs.  SalMar ASA

Adecoagro SA

Risk-Adjusted Performance

Very Weak

Over the last 90 days Adecoagro SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Adecoagro is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

SalMar ASA

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in SalMar ASA are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, SalMar ASA may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Adecoagro and SalMar ASA

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

The idea behind Adecoagro SA and SalMar 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.