Correlation Between SLC Agricola and Limoneira

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

Diversification Opportunities for SLC Agricola and Limoneira

-0.22

Correlation Coefficient

SLC Agricola  Limoneira

Very good diversification

The 3 months correlation between SLC and Limoneira is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding SLC Agricola SA and Limoneira Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Limoneira 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 Limoneira. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Limoneira has no effect on the direction of SLC Agricola i.e., SLC Agricola and Limoneira go up and down completely randomly.

Pair Corralation between SLC Agricola and Limoneira

Assuming the 90 days horizon SLC Agricola SA is expected to generate 9.82 times more return on investment than Limoneira. However, SLC Agricola is 9.82 times more volatile than Limoneira Co. It trades about 0.07 of its potential returns per unit of risk. Limoneira Co is currently generating about 0.09 per unit of risk. If you would invest  322.00  in SLC Agricola SA on September 3, 2024 and sell it today you would lose (36.00) from holding SLC Agricola SA or give up 11.18% of portfolio value over 90 days.

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

SLC Agricola SA  vs.  Limoneira Co

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.

Limoneira

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Limoneira Co are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady basic indicators, Limoneira reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SLC Agricola and Limoneira

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

The idea behind SLC Agricola SA and Limoneira Co 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.