Correlation Between AppHarvest and Australian Agricultural

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

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

Diversification Opportunities for AppHarvest and Australian Agricultural

0.49

Correlation Coefficient

AppHarvest  Australian Agricultural

Very weak diversification

The 3 months correlation between AppHarvest and Australian is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding AppHarvest and Australian Agricultural in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Australian Agricultural and AppHarvest 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 AppHarvest are associated (or correlated) with Australian Agricultural. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Australian Agricultural has no effect on the direction of AppHarvest i.e., AppHarvest and Australian Agricultural go up and down completely randomly.

Pair Corralation between AppHarvest and Australian Agricultural

If you would invest  0.90  in AppHarvest on September 15, 2024 and sell it today you would earn a total of  0.00  from holding AppHarvest or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	1.56%
Values	Daily Returns

AppHarvest  vs.  Australian Agricultural

AppHarvest

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AppHarvest has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable technical indicators, AppHarvest is not utilizing all of its potentials. The recent stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Australian Agricultural

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Australian Agricultural has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's technical and fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with AppHarvest and Australian Agricultural

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

The idea behind AppHarvest and Australian Agricultural 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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.