Correlation Between Brasilagro Adr and SW Seed

Can any of the company-specific risk be diversified away by investing in both Brasilagro Adr and SW Seed 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 Brasilagro Adr and SW Seed into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Brasilagro Adr and SW Seed Company, you can compare the effects of market volatilities on Brasilagro Adr and SW Seed 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 Brasilagro Adr with a short position of SW Seed. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brasilagro Adr and SW Seed.

Diversification Opportunities for Brasilagro Adr and SW Seed

0.35

Correlation Coefficient

Brasilagro Adr  SW Seed

Weak diversification

The 3 months correlation between Brasilagro and SANW is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Brasilagro Adr and SW Seed Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SW Seed Company and Brasilagro Adr 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 Brasilagro Adr are associated (or correlated) with SW Seed. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SW Seed Company has no effect on the direction of Brasilagro Adr i.e., Brasilagro Adr and SW Seed go up and down completely randomly.

Pair Corralation between Brasilagro Adr and SW Seed

Considering the 90-day investment horizon Brasilagro Adr is expected to generate 0.27 times more return on investment than SW Seed. However, Brasilagro Adr is 3.75 times less risky than SW Seed. It trades about 0.11 of its potential returns per unit of risk. SW Seed Company is currently generating about -0.03 per unit of risk. If you would invest  355.00  in Brasilagro Adr on December 29, 2024 and sell it today you would earn a total of  34.00  from holding Brasilagro Adr or generate 9.58% return on investment over 90 days.

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

Brasilagro Adr  vs.  SW Seed Company

Brasilagro Adr

Risk-Adjusted Performance

OK

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

SW Seed Company

Risk-Adjusted Performance

Very Weak

Over the last 90 days SW Seed Company has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Pair Trading with Brasilagro Adr and SW Seed

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

The idea behind Brasilagro Adr and SW Seed Company 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 Transaction History module to view history of all your transactions and understand their impact on performance.