Correlation Between Germina Agribusiness and Electromagnetica

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

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

Diversification Opportunities for Germina Agribusiness and Electromagnetica

-0.03

Correlation Coefficient

Germina Agribusiness  Electromagnetica

Good diversification

The 3 months correlation between Germina and Electromagnetica is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Germina Agribusiness SA and Electromagnetica SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Electromagnetica and Germina Agribusiness 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 Germina Agribusiness SA are associated (or correlated) with Electromagnetica. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Electromagnetica has no effect on the direction of Germina Agribusiness i.e., Germina Agribusiness and Electromagnetica go up and down completely randomly.

Pair Corralation between Germina Agribusiness and Electromagnetica

Assuming the 90 days trading horizon Germina Agribusiness is expected to generate 2.11 times less return on investment than Electromagnetica. But when comparing it to its historical volatility, Germina Agribusiness SA is 1.12 times less risky than Electromagnetica. It trades about 0.03 of its potential returns per unit of risk. Electromagnetica SA is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  22.00  in Electromagnetica SA on December 27, 2024 and sell it today you would earn a total of  2.00  from holding Electromagnetica SA or generate 9.09% return on investment over 90 days.

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

Germina Agribusiness SA  vs.  Electromagnetica SA

Germina Agribusiness

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Germina Agribusiness SA are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Germina Agribusiness is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Electromagnetica

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Electromagnetica SA are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain basic indicators, Electromagnetica displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Germina Agribusiness and Electromagnetica

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

The idea behind Germina Agribusiness SA and Electromagnetica 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.

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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.