Correlation Between Golden Agri-Resources and Forafric Global

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

Diversification Opportunities for Golden Agri-Resources and Forafric Global

0.39

Correlation Coefficient

Golden Agri-Resources  Forafric Global

Weak diversification

The 3 months correlation between Golden and Forafric is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Golden Agri Resources and Forafric Global PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Forafric Global PLC 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 Forafric Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Forafric Global PLC has no effect on the direction of Golden Agri-Resources i.e., Golden Agri-Resources and Forafric Global go up and down completely randomly.

Pair Corralation between Golden Agri-Resources and Forafric Global

Assuming the 90 days horizon Golden Agri Resources is expected to under-perform the Forafric Global. But the pink sheet apears to be less risky and, when comparing its historical volatility, Golden Agri Resources is 8.08 times less risky than Forafric Global. The pink sheet trades about -0.04 of its potential returns per unit of risk. The Forafric Global PLC is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  115.00  in Forafric Global PLC on October 25, 2024 and sell it today you would lose (14.00) from holding Forafric Global PLC or give up 12.17% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	81.36%
Values	Daily Returns

Golden Agri Resources  vs.  Forafric Global PLC

Golden Agri Resources

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Golden Agri Resources has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Golden Agri-Resources is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Forafric Global PLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Forafric Global PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable forward indicators, Forafric Global is not utilizing all of its potentials. The recent stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Golden Agri-Resources and Forafric Global

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

The idea behind Golden Agri Resources and Forafric Global PLC 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.