Correlation Between Golden Agri-Resources and Prologis

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

By analyzing existing cross correlation between Golden Agri Resources and Prologis, you can compare the effects of market volatilities on Golden Agri-Resources and Prologis 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 Golden Agri-Resources with a short position of Prologis. Check out your portfolio center. Please also check ongoing floating volatility patterns of Golden Agri-Resources and Prologis.

Diversification Opportunities for Golden Agri-Resources and Prologis

-0.65

Correlation Coefficient

Golden Agri-Resources  Prologis

Excellent diversification

The 3 months correlation between Golden and Prologis is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Golden Agri Resources and Prologis in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prologis and Golden Agri-Resources 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 Golden Agri Resources are associated (or correlated) with Prologis. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prologis has no effect on the direction of Golden Agri-Resources i.e., Golden Agri-Resources and Prologis go up and down completely randomly.

Pair Corralation between Golden Agri-Resources and Prologis

Assuming the 90 days horizon Golden Agri Resources is expected to generate 1.83 times more return on investment than Prologis. However, Golden Agri-Resources is 1.83 times more volatile than Prologis. It trades about 0.09 of its potential returns per unit of risk. Prologis is currently generating about -0.03 per unit of risk. If you would invest  17.00  in Golden Agri Resources on August 31, 2024 and sell it today you would earn a total of  3.00  from holding Golden Agri Resources or generate 17.65% return on investment over 90 days.

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

Golden Agri Resources  vs.  Prologis

Golden Agri Resources

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Golden Agri Resources are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Golden Agri-Resources reported solid returns over the last few months and may actually be approaching a breakup point.

Prologis

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Prologis has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable technical and fundamental indicators, Prologis is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Golden Agri-Resources and Prologis

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

The idea behind Golden Agri Resources and Prologis 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 Global Correlations module to find global opportunities by holding instruments from different markets.