Correlation Between Labiana Health and Borges Agricultural

Can any of the company-specific risk be diversified away by investing in both Labiana Health and Borges Agricultural 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 Labiana Health and Borges Agricultural into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Labiana Health SA and Borges Agricultural Industrial, you can compare the effects of market volatilities on Labiana Health and Borges Agricultural 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 Labiana Health with a short position of Borges Agricultural. Check out your portfolio center. Please also check ongoing floating volatility patterns of Labiana Health and Borges Agricultural.

Diversification Opportunities for Labiana Health and Borges Agricultural

0.39

Correlation Coefficient

Labiana Health  Borges Agricultural

Weak diversification

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

Pair Corralation between Labiana Health and Borges Agricultural

Assuming the 90 days trading horizon Labiana Health SA is expected to under-perform the Borges Agricultural. In addition to that, Labiana Health is 1.07 times more volatile than Borges Agricultural Industrial. It trades about -0.02 of its total potential returns per unit of risk. Borges Agricultural Industrial is currently generating about 0.13 per unit of volatility. If you would invest  292.00  in Borges Agricultural Industrial on December 30, 2024 and sell it today you would earn a total of  52.00  from holding Borges Agricultural Industrial or generate 17.81% return on investment over 90 days.

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

Labiana Health SA  vs.  Borges Agricultural Industrial

Labiana Health SA

Risk-Adjusted Performance

Very Weak

Over the last 90 days Labiana Health SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental drivers, Labiana Health is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Borges Agricultural

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Borges Agricultural Industrial are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, Borges Agricultural exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Labiana Health and Borges Agricultural

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

The idea behind Labiana Health SA and Borges Agricultural Industrial 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.