Correlation Between Adecoagro and SLC Agricola

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

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

Diversification Opportunities for Adecoagro and SLC Agricola

0.21

Correlation Coefficient

Adecoagro  SLC Agricola

Modest diversification

The 3 months correlation between Adecoagro and SLC is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Adecoagro SA and SLC Agricola SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SLC Agricola SA 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 SLC Agricola. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SLC Agricola SA has no effect on the direction of Adecoagro i.e., Adecoagro and SLC Agricola go up and down completely randomly.

Pair Corralation between Adecoagro and SLC Agricola

Given the investment horizon of 90 days Adecoagro SA is expected to under-perform the SLC Agricola. But the stock apears to be less risky and, when comparing its historical volatility, Adecoagro SA is 2.33 times less risky than SLC Agricola. The stock trades about -0.31 of its potential returns per unit of risk. The SLC Agricola SA is currently generating about -0.08 of returns per unit of risk over similar time horizon. If you would invest  300.00  in SLC Agricola SA on October 5, 2024 and sell it today you would lose (21.00) from holding SLC Agricola SA or give up 7.0% of portfolio value over 90 days.

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

Adecoagro SA  vs.  SLC Agricola SA

Adecoagro SA

Risk-Adjusted Performance

0 of 100

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 latest weak performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

SLC Agricola SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SLC Agricola SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's forward-looking indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Adecoagro and SLC Agricola

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

The idea behind Adecoagro SA and SLC Agricola SA 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.