Correlation Between Borges Agricultural and Arteche Lantegi

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

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

Diversification Opportunities for Borges Agricultural and Arteche Lantegi

-0.64

Correlation Coefficient

Borges Agricultural  Arteche Lantegi

Excellent diversification

The 3 months correlation between Borges and Arteche is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Borges Agricultural Industrial and Arteche Lantegi Elkartea in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arteche Lantegi Elkartea and Borges Agricultural 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 Borges Agricultural Industrial are associated (or correlated) with Arteche Lantegi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arteche Lantegi Elkartea has no effect on the direction of Borges Agricultural i.e., Borges Agricultural and Arteche Lantegi go up and down completely randomly.

Pair Corralation between Borges Agricultural and Arteche Lantegi

Assuming the 90 days trading horizon Borges Agricultural Industrial is expected to generate 0.86 times more return on investment than Arteche Lantegi. However, Borges Agricultural Industrial is 1.17 times less risky than Arteche Lantegi. It trades about 0.13 of its potential returns per unit of risk. Arteche Lantegi Elkartea is currently generating about 0.04 per unit of risk. If you would invest  292.00  in Borges Agricultural Industrial on December 30, 2024 and sell it today you would earn a total of  52.00  from holding Borges Agricultural Industrial or generate 17.81% return on investment over 90 days.

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

Borges Agricultural Industrial  vs.  Arteche Lantegi Elkartea

Borges Agricultural

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Borges Agricultural Industrial are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, Borges Agricultural exhibited solid returns over the last few months and may actually be approaching a breakup point.

Arteche Lantegi Elkartea

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Arteche Lantegi Elkartea are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Arteche Lantegi is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Borges Agricultural and Arteche Lantegi

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

The idea behind Borges Agricultural Industrial and Arteche Lantegi Elkartea 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.