Correlation Between Alico and Minerva SA

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

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

Diversification Opportunities for Alico and Minerva SA

0.69

Correlation Coefficient

Alico  Minerva SA

Poor diversification

The 3 months correlation between Alico and Minerva is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Alico Inc and Minerva SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Minerva SA and Alico 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 Alico Inc are associated (or correlated) with Minerva SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Minerva SA has no effect on the direction of Alico i.e., Alico and Minerva SA go up and down completely randomly.

Pair Corralation between Alico and Minerva SA

Given the investment horizon of 90 days Alico Inc is expected to generate 0.79 times more return on investment than Minerva SA. However, Alico Inc is 1.27 times less risky than Minerva SA. It trades about -0.03 of its potential returns per unit of risk. Minerva SA is currently generating about -0.16 per unit of risk. If you would invest  2,833  in Alico Inc on September 1, 2024 and sell it today you would lose (153.00) from holding Alico Inc or give up 5.4% of portfolio value over 90 days.

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

Alico Inc  vs.  Minerva SA

Alico Inc

Risk-Adjusted Performance

0 of 100

Very Weak

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

Minerva SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Minerva SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in December 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Alico and Minerva SA

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

The idea behind Alico Inc and Minerva 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..