Correlation Between Ready Capital and Agriculture Natural

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

By analyzing existing cross correlation between Ready Capital Corp and Agriculture Natural Solutions, you can compare the effects of market volatilities on Ready Capital and Agriculture Natural 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 Ready Capital with a short position of Agriculture Natural. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ready Capital and Agriculture Natural.

Diversification Opportunities for Ready Capital and Agriculture Natural

-0.51

Correlation Coefficient

Ready Capital  Agriculture Natural

Excellent diversification

The 3 months correlation between Ready and Agriculture is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Ready Capital Corp and Agriculture Natural Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Agriculture Natural and Ready Capital 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 Ready Capital Corp are associated (or correlated) with Agriculture Natural. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Agriculture Natural has no effect on the direction of Ready Capital i.e., Ready Capital and Agriculture Natural go up and down completely randomly.

Pair Corralation between Ready Capital and Agriculture Natural

Allowing for the 90-day total investment horizon Ready Capital Corp is expected to under-perform the Agriculture Natural. But the stock apears to be less risky and, when comparing its historical volatility, Ready Capital Corp is 2.26 times less risky than Agriculture Natural. The stock trades about -0.1 of its potential returns per unit of risk. The Agriculture Natural Solutions is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  27.00  in Agriculture Natural Solutions on December 30, 2024 and sell it today you would earn a total of  3.00  from holding Agriculture Natural Solutions or generate 11.11% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	91.94%
Values	Daily Returns

Ready Capital Corp  vs.  Agriculture Natural Solutions

Ready Capital Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ready Capital Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's fundamental indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Agriculture Natural

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Agriculture Natural Solutions are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak fundamental indicators, Agriculture Natural showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ready Capital and Agriculture Natural

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

The idea behind Ready Capital Corp and Agriculture Natural Solutions 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.