Correlation Between Minerva SA and Adecoagro

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

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

Diversification Opportunities for Minerva SA and Adecoagro

0.59

Correlation Coefficient

Minerva SA  Adecoagro

Very weak diversification

The 3 months correlation between Minerva and Adecoagro is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Minerva SA and Adecoagro SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Adecoagro SA and Minerva SA 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 Minerva SA are associated (or correlated) with Adecoagro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Adecoagro SA has no effect on the direction of Minerva SA i.e., Minerva SA and Adecoagro go up and down completely randomly.

Pair Corralation between Minerva SA and Adecoagro

Assuming the 90 days horizon Minerva SA is expected to generate 7.03 times more return on investment than Adecoagro. However, Minerva SA is 7.03 times more volatile than Adecoagro SA. It trades about 0.1 of its potential returns per unit of risk. Adecoagro SA is currently generating about 0.18 per unit of risk. If you would invest  343.00  in Minerva SA on December 30, 2024 and sell it today you would earn a total of  137.00  from holding Minerva SA or generate 39.94% return on investment over 90 days.

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

Minerva SA  vs.  Adecoagro SA

Minerva SA

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Minerva SA are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Minerva SA showed solid returns over the last few months and may actually be approaching a breakup point.

Adecoagro SA

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Adecoagro SA are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Adecoagro displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Minerva SA and Adecoagro

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

The idea behind Minerva SA and Adecoagro SA 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.