Correlation Between Prodways Group and Amatheon Agri

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

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

Diversification Opportunities for Prodways Group and Amatheon Agri

0.31

Correlation Coefficient

Prodways Group  Amatheon Agri

Weak diversification

The 3 months correlation between Prodways and Amatheon is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Prodways Group SA and Amatheon Agri Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amatheon Agri Holding and Prodways Group 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 Prodways Group SA are associated (or correlated) with Amatheon Agri. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amatheon Agri Holding has no effect on the direction of Prodways Group i.e., Prodways Group and Amatheon Agri go up and down completely randomly.

Pair Corralation between Prodways Group and Amatheon Agri

Assuming the 90 days trading horizon Prodways Group is expected to generate 2.63 times less return on investment than Amatheon Agri. But when comparing it to its historical volatility, Prodways Group SA is 4.94 times less risky than Amatheon Agri. It trades about 0.06 of its potential returns per unit of risk. Amatheon Agri Holding is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  4.30  in Amatheon Agri Holding on October 22, 2024 and sell it today you would lose (1.45) from holding Amatheon Agri Holding or give up 33.72% of portfolio value over 90 days.

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

Prodways Group SA  vs.  Amatheon Agri Holding

Prodways Group SA

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Prodways Group SA are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak technical and fundamental indicators, Prodways Group sustained solid returns over the last few months and may actually be approaching a breakup point.

Amatheon Agri Holding

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Amatheon Agri Holding are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Amatheon Agri reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Prodways Group and Amatheon Agri

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

The idea behind Prodways Group SA and Amatheon Agri Holding 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.