Correlation Between Bioceres Crop and American Vanguard

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

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

Diversification Opportunities for Bioceres Crop and American Vanguard

0.19

Correlation Coefficient

Bioceres Crop  American Vanguard

Average diversification

The 3 months correlation between Bioceres and American is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Bioceres Crop Solutions and American Vanguard in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Vanguard and Bioceres Crop 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 Bioceres Crop Solutions are associated (or correlated) with American Vanguard. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Vanguard has no effect on the direction of Bioceres Crop i.e., Bioceres Crop and American Vanguard go up and down completely randomly.

Pair Corralation between Bioceres Crop and American Vanguard

Given the investment horizon of 90 days Bioceres Crop Solutions is expected to generate 0.66 times more return on investment than American Vanguard. However, Bioceres Crop Solutions is 1.51 times less risky than American Vanguard. It trades about -0.04 of its potential returns per unit of risk. American Vanguard is currently generating about -0.06 per unit of risk. If you would invest  1,206  in Bioceres Crop Solutions on September 1, 2024 and sell it today you would lose (494.00) from holding Bioceres Crop Solutions or give up 40.96% of portfolio value over 90 days.

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

Bioceres Crop Solutions  vs.  American Vanguard

Bioceres Crop Solutions

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bioceres Crop Solutions has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent 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.

American Vanguard

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in American Vanguard are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, American Vanguard is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Bioceres Crop and American Vanguard

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

The idea behind Bioceres Crop Solutions and American Vanguard 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.