Correlation Between SLC Agricola and Alico

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

Diversification Opportunities for SLC Agricola and Alico

0.15

Correlation Coefficient

SLC Agricola  Alico

Average diversification

The 3 months correlation between SLC and Alico is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding SLC Agricola SA and Alico Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alico Inc 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 Alico. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alico Inc has no effect on the direction of SLC Agricola i.e., SLC Agricola and Alico go up and down completely randomly.

Pair Corralation between SLC Agricola and Alico

Assuming the 90 days horizon SLC Agricola is expected to generate 10.45 times less return on investment than Alico. But when comparing it to its historical volatility, SLC Agricola SA is 1.34 times less risky than Alico. It trades about 0.01 of its potential returns per unit of risk. Alico Inc is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  2,547  in Alico Inc on December 27, 2024 and sell it today you would earn a total of  385.00  from holding Alico Inc or generate 15.12% return on investment over 90 days.

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

SLC Agricola SA  vs.  Alico Inc

SLC Agricola SA

Risk-Adjusted Performance

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.

Alico Inc

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Alico Inc are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very weak fundamental indicators, Alico displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SLC Agricola and Alico

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

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