Correlation Between Electromagnetica and Germina Agribusiness

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

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

Diversification Opportunities for Electromagnetica and Germina Agribusiness

-0.03

Correlation Coefficient

Electromagnetica  Germina Agribusiness

Good diversification

The 3 months correlation between Electromagnetica and Germina is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Electromagnetica SA and Germina Agribusiness SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Germina Agribusiness and Electromagnetica 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 Electromagnetica SA are associated (or correlated) with Germina Agribusiness. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Germina Agribusiness has no effect on the direction of Electromagnetica i.e., Electromagnetica and Germina Agribusiness go up and down completely randomly.

Pair Corralation between Electromagnetica and Germina Agribusiness

Assuming the 90 days trading horizon Electromagnetica SA is expected to generate 1.12 times more return on investment than Germina Agribusiness. However, Electromagnetica is 1.12 times more volatile than Germina Agribusiness SA. It trades about 0.06 of its potential returns per unit of risk. Germina Agribusiness SA is currently generating about 0.03 per unit of risk. If you would invest  22.00  in Electromagnetica SA on December 27, 2024 and sell it today you would earn a total of  2.00  from holding Electromagnetica SA or generate 9.09% return on investment over 90 days.

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

Electromagnetica SA  vs.  Germina Agribusiness SA

Electromagnetica

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Electromagnetica SA are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain basic indicators, Electromagnetica displayed solid returns over the last few months and may actually be approaching a breakup point.

Germina Agribusiness

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Germina Agribusiness SA are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Germina Agribusiness is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Electromagnetica and Germina Agribusiness

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

The idea behind Electromagnetica SA and Germina Agribusiness 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.

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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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.