Correlation Between Corteva and Bioceres Crop

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

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

Diversification Opportunities for Corteva and Bioceres Crop

-0.6

Correlation Coefficient

Corteva  Bioceres Crop

Excellent diversification

The 3 months correlation between Corteva and Bioceres is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Corteva and Bioceres Crop Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bioceres Crop Solutions and Corteva 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 Corteva are associated (or correlated) with Bioceres Crop. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bioceres Crop Solutions has no effect on the direction of Corteva i.e., Corteva and Bioceres Crop go up and down completely randomly.

Pair Corralation between Corteva and Bioceres Crop

Given the investment horizon of 90 days Corteva is expected to generate 0.77 times more return on investment than Bioceres Crop. However, Corteva is 1.31 times less risky than Bioceres Crop. It trades about 0.01 of its potential returns per unit of risk. Bioceres Crop Solutions is currently generating about -0.04 per unit of risk. If you would invest  6,101  in Corteva on September 1, 2024 and sell it today you would earn a total of  123.00  from holding Corteva or generate 2.02% return on investment over 90 days.

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

Corteva  vs.  Bioceres Crop Solutions

Corteva

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Corteva are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat fragile basic indicators, Corteva may actually be approaching a critical reversion point that can send shares even higher in December 2024.

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.

Pair Trading with Corteva and Bioceres Crop

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

The idea behind Corteva and Bioceres Crop Solutions 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..