Correlation Between SalMar ASA and Brasilagro Adr

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

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

Diversification Opportunities for SalMar ASA and Brasilagro Adr

0.46

Correlation Coefficient

SalMar ASA  Brasilagro Adr

Very weak diversification

The 3 months correlation between SalMar and Brasilagro is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding SalMar ASA and Brasilagro Adr in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brasilagro Adr and SalMar ASA 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 SalMar ASA are associated (or correlated) with Brasilagro Adr. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brasilagro Adr has no effect on the direction of SalMar ASA i.e., SalMar ASA and Brasilagro Adr go up and down completely randomly.

Pair Corralation between SalMar ASA and Brasilagro Adr

Assuming the 90 days horizon SalMar ASA is expected to under-perform the Brasilagro Adr. In addition to that, SalMar ASA is 2.2 times more volatile than Brasilagro Adr. It trades about 0.0 of its total potential returns per unit of risk. Brasilagro Adr is currently generating about 0.11 per unit of volatility. If you would invest  355.00  in Brasilagro Adr on December 30, 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	Weak
Accuracy	100.0%
Values	Daily Returns

SalMar ASA  vs.  Brasilagro Adr

SalMar ASA

Risk-Adjusted Performance

Very Weak

Over the last 90 days SalMar ASA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, SalMar ASA is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

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.

Pair Trading with SalMar ASA and Brasilagro Adr

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

The idea behind SalMar ASA and Brasilagro Adr 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.

Check out your portfolio center.

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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.