Correlation Between Golden Agri-Resources and SLC Agricola

Can any of the company-specific risk be diversified away by investing in both Golden Agri-Resources and SLC Agricola 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 SLC Agricola 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 SLC Agricola SA, you can compare the effects of market volatilities on Golden Agri-Resources and SLC Agricola 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 SLC Agricola. Check out your portfolio center. Please also check ongoing floating volatility patterns of Golden Agri-Resources and SLC Agricola.

Diversification Opportunities for Golden Agri-Resources and SLC Agricola

0.11

Correlation Coefficient

Golden Agri-Resources  SLC Agricola

Average diversification

The 3 months correlation between Golden and SLC is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Golden Agri Resources and SLC Agricola SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SLC Agricola SA 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 SLC Agricola. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SLC Agricola SA has no effect on the direction of Golden Agri-Resources i.e., Golden Agri-Resources and SLC Agricola go up and down completely randomly.

Pair Corralation between Golden Agri-Resources and SLC Agricola

Assuming the 90 days horizon Golden Agri Resources is expected to generate 4.37 times more return on investment than SLC Agricola. However, Golden Agri-Resources is 4.37 times more volatile than SLC Agricola SA. It trades about 0.05 of its potential returns per unit of risk. SLC Agricola SA is currently generating about 0.11 per unit of risk. If you would invest  19.00  in Golden Agri Resources on December 28, 2024 and sell it today you would earn a total of  1.00  from holding Golden Agri Resources or generate 5.26% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	93.33%
Values	Daily Returns

Golden Agri Resources  vs.  SLC Agricola SA

Golden Agri Resources

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Golden Agri Resources are ranked lower than 4 (%) 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.

SLC Agricola SA

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in SLC Agricola SA are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile forward-looking indicators, SLC Agricola may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Golden Agri-Resources and SLC Agricola

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

The idea behind Golden Agri Resources and SLC Agricola 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.