Correlation Between SLC Agricola and Adecoagro

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

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

Diversification Opportunities for SLC Agricola and Adecoagro

0.46

Correlation Coefficient

SLC Agricola  Adecoagro

Very weak diversification

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

Pair Corralation between SLC Agricola and Adecoagro

Assuming the 90 days horizon SLC Agricola SA is expected to generate 8.56 times more return on investment than Adecoagro. However, SLC Agricola is 8.56 times more volatile than Adecoagro SA. It trades about 0.06 of its potential returns per unit of risk. Adecoagro SA is currently generating about 0.03 per unit of risk. If you would invest  410.00  in SLC Agricola SA on October 20, 2024 and sell it today you would lose (118.00) from holding SLC Agricola SA or give up 28.78% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.59%
Values	Daily Returns

SLC Agricola SA  vs.  Adecoagro SA

SLC Agricola SA

Risk-Adjusted Performance

0 of 100

Very Weak

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

Adecoagro SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Adecoagro SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with SLC Agricola and Adecoagro

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

The idea behind SLC Agricola SA and Adecoagro 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.