Correlation Between GrainCorp and Forafric Global
Can any of the company-specific risk be diversified away by investing in both GrainCorp 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 GrainCorp and Forafric Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GrainCorp Limited and Forafric Global PLC, you can compare the effects of market volatilities on GrainCorp 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 GrainCorp with a short position of Forafric Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of GrainCorp and Forafric Global.
Diversification Opportunities for GrainCorp and Forafric Global
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between GrainCorp and Forafric is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding GrainCorp Limited 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 GrainCorp 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 GrainCorp Limited 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 GrainCorp i.e., GrainCorp and Forafric Global go up and down completely randomly.
Pair Corralation between GrainCorp and Forafric Global
Assuming the 90 days horizon GrainCorp Limited is expected to generate 0.37 times more return on investment than Forafric Global. However, GrainCorp Limited is 2.71 times less risky than Forafric Global. It trades about -0.07 of its potential returns per unit of risk. Forafric Global PLC is currently generating about -0.03 per unit of risk. If you would invest 570.00 in GrainCorp Limited on September 6, 2024 and sell it today you would lose (73.00) from holding GrainCorp Limited or give up 12.81% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 68.75% |
Values | Daily Returns |
GrainCorp Limited vs. Forafric Global PLC
Performance |
Timeline |
GrainCorp Limited |
Forafric Global PLC |
GrainCorp and Forafric Global Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with GrainCorp and Forafric Global
The main advantage of trading using opposite GrainCorp and Forafric Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GrainCorp 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.GrainCorp vs. Australian Agricultural | GrainCorp vs. Forafric Global PLC | GrainCorp vs. Forafric Global PLC |
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Check out your portfolio center.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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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