Correlation Between Borges Agricultural and Profithol

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

Diversification Opportunities for Borges Agricultural and Profithol

0.27

Correlation Coefficient

Borges Agricultural  Profithol

Modest diversification

The 3 months correlation between Borges and Profithol is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Borges Agricultural Industrial and Profithol SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Profithol SA 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 Profithol. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Profithol SA has no effect on the direction of Borges Agricultural i.e., Borges Agricultural and Profithol go up and down completely randomly.

Pair Corralation between Borges Agricultural and Profithol

Assuming the 90 days trading horizon Borges Agricultural Industrial is expected to under-perform the Profithol. But the stock apears to be less risky and, when comparing its historical volatility, Borges Agricultural Industrial is 41.37 times less risky than Profithol. The stock trades about -0.17 of its potential returns per unit of risk. The Profithol SA is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  50.00  in Profithol SA on September 12, 2024 and sell it today you would earn a total of  4.00  from holding Profithol SA or generate 8.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.65%
Values	Daily Returns

Borges Agricultural Industrial  vs.  Profithol SA

Borges Agricultural

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Borges Agricultural Industrial are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, Borges Agricultural may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Profithol SA

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Profithol SA are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical indicators, Profithol exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Borges Agricultural and Profithol

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

The idea behind Borges Agricultural Industrial and Profithol 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.

Check out your portfolio center.

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 Transaction History module to view history of all your transactions and understand their impact on performance.