Correlation Between Germina Agribusiness and Med Life

Can any of the company-specific risk be diversified away by investing in both Germina Agribusiness and Med Life 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 Med Life 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 Med Life SA, you can compare the effects of market volatilities on Germina Agribusiness and Med Life 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 Med Life. Check out your portfolio center. Please also check ongoing floating volatility patterns of Germina Agribusiness and Med Life.

Diversification Opportunities for Germina Agribusiness and Med Life

0.62

Correlation Coefficient

Germina Agribusiness  Med Life

Poor diversification

The 3 months correlation between Germina and Med is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Germina Agribusiness SA and Med Life SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Med Life SA 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 Med Life. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Med Life SA has no effect on the direction of Germina Agribusiness i.e., Germina Agribusiness and Med Life go up and down completely randomly.

Pair Corralation between Germina Agribusiness and Med Life

Assuming the 90 days trading horizon Germina Agribusiness SA is expected to generate 1.11 times more return on investment than Med Life. However, Germina Agribusiness is 1.11 times more volatile than Med Life SA. It trades about 0.05 of its potential returns per unit of risk. Med Life SA is currently generating about -0.02 per unit of risk. If you would invest  103.00  in Germina Agribusiness SA on October 9, 2024 and sell it today you would earn a total of  62.00  from holding Germina Agribusiness SA or generate 60.19% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	94.87%
Values	Daily Returns

Germina Agribusiness SA  vs.  Med Life SA

Germina Agribusiness

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Germina Agribusiness SA has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

Med Life SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Med Life SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Med Life is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Germina Agribusiness and Med Life

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

The idea behind Germina Agribusiness SA and Med Life 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.