Correlation Between SLC Agricola and Bunge

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

Diversification Opportunities for SLC Agricola and Bunge

-0.53

Correlation Coefficient

SLC Agricola  Bunge

Excellent diversification

The 3 months correlation between SLC and Bunge is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding SLC Agricola SA and Bunge Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bunge Limited 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 Bunge. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bunge Limited has no effect on the direction of SLC Agricola i.e., SLC Agricola and Bunge go up and down completely randomly.

Pair Corralation between SLC Agricola and Bunge

Assuming the 90 days horizon SLC Agricola SA is expected to generate 1.49 times more return on investment than Bunge. However, SLC Agricola is 1.49 times more volatile than Bunge Limited. It trades about 0.1 of its potential returns per unit of risk. Bunge Limited is currently generating about -0.04 per unit of risk. If you would invest  285.00  in SLC Agricola SA on December 26, 2024 and sell it today you would earn a total of  40.00  from holding SLC Agricola SA or generate 14.04% return on investment over 90 days.

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

SLC Agricola SA  vs.  Bunge Limited

SLC Agricola SA

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in SLC Agricola SA are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile forward-looking indicators, SLC Agricola showed solid returns over the last few months and may actually be approaching a breakup point.

Bunge Limited

Risk-Adjusted Performance

Very Weak

Over the last 90 days Bunge Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, Bunge is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with SLC Agricola and Bunge

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

The idea behind SLC Agricola SA and Bunge Limited 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.