Correlation Between Golden Agri-Resources and Limoneira

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

Diversification Opportunities for Golden Agri-Resources and Limoneira

0.54

Correlation Coefficient

Golden Agri-Resources  Limoneira

Very weak diversification

The 3 months correlation between Golden and Limoneira is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Golden Agri Resources and Limoneira Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Limoneira 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 Limoneira. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Limoneira has no effect on the direction of Golden Agri-Resources i.e., Golden Agri-Resources and Limoneira go up and down completely randomly.

Pair Corralation between Golden Agri-Resources and Limoneira

Assuming the 90 days horizon Golden Agri Resources is expected to generate 0.94 times more return on investment than Limoneira. However, Golden Agri Resources is 1.07 times less risky than Limoneira. It trades about -0.04 of its potential returns per unit of risk. Limoneira Co is currently generating about -0.25 per unit of risk. If you would invest  2,080  in Golden Agri Resources on December 20, 2024 and sell it today you would lose (160.00) from holding Golden Agri Resources or give up 7.69% of portfolio value over 90 days.

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

Golden Agri Resources  vs.  Limoneira Co

Golden Agri Resources

Risk-Adjusted Performance

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 latest inconsistent performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Limoneira

Risk-Adjusted Performance

Very Weak

Over the last 90 days Limoneira Co has generated negative risk-adjusted returns adding no value to investors with long positions. Even with unsteady performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in April 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Golden Agri-Resources and Limoneira

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

The idea behind Golden Agri Resources and Limoneira Co 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.