Correlation Between Borges Agricultural and Vytrus Biotech

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

Diversification Opportunities for Borges Agricultural and Vytrus Biotech

0.89

Correlation Coefficient

Borges Agricultural  Vytrus Biotech

Very poor diversification

The 3 months correlation between Borges and Vytrus is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Borges Agricultural Industrial and Vytrus Biotech SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vytrus Biotech 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 Vytrus Biotech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vytrus Biotech SA has no effect on the direction of Borges Agricultural i.e., Borges Agricultural and Vytrus Biotech go up and down completely randomly.

Pair Corralation between Borges Agricultural and Vytrus Biotech

Assuming the 90 days trading horizon Borges Agricultural is expected to generate 3.83 times less return on investment than Vytrus Biotech. But when comparing it to its historical volatility, Borges Agricultural Industrial is 1.97 times less risky than Vytrus Biotech. It trades about 0.22 of its potential returns per unit of risk. Vytrus Biotech SA is currently generating about 0.43 of returns per unit of risk over similar time horizon. If you would invest  222.00  in Vytrus Biotech SA on December 3, 2024 and sell it today you would earn a total of  48.00  from holding Vytrus Biotech SA or generate 21.62% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	95.45%
Values	Daily Returns

Borges Agricultural Industrial  vs.  Vytrus Biotech SA

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 10 (%) 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.

Vytrus Biotech SA

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Vytrus Biotech SA are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating basic indicators, Vytrus Biotech exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Borges Agricultural and Vytrus Biotech

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

The idea behind Borges Agricultural Industrial and Vytrus Biotech 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.