Correlation Between Bioceres Crop and CF Industries

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

Diversification Opportunities for Bioceres Crop and CF Industries

-0.59

Correlation Coefficient

Bioceres Crop  CF Industries

Excellent diversification

The 3 months correlation between Bioceres and CF Industries is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Bioceres Crop Solutions and CF Industries Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CF Industries Holdings 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 CF Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CF Industries Holdings has no effect on the direction of Bioceres Crop i.e., Bioceres Crop and CF Industries go up and down completely randomly.

Pair Corralation between Bioceres Crop and CF Industries

Given the investment horizon of 90 days Bioceres Crop Solutions is expected to under-perform the CF Industries. In addition to that, Bioceres Crop is 1.23 times more volatile than CF Industries Holdings. It trades about -0.04 of its total potential returns per unit of risk. CF Industries Holdings is currently generating about 0.0 per unit of volatility. If you would invest  9,427  in CF Industries Holdings on September 1, 2024 and sell it today you would lose (461.00) from holding CF Industries Holdings or give up 4.89% of portfolio value over 90 days.

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

Bioceres Crop Solutions  vs.  CF Industries Holdings

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.

CF Industries Holdings

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in CF Industries Holdings are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak technical and fundamental indicators, CF Industries reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Bioceres Crop and CF Industries

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

The idea behind Bioceres Crop Solutions and CF Industries Holdings 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.