Correlation Between Profithol and Borges Agricultural

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

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

Diversification Opportunities for Profithol and Borges Agricultural

0.24

Correlation Coefficient

Profithol  Borges Agricultural

Modest diversification

The 3 months correlation between Profithol and Borges is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Profithol SA and Borges Agricultural Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Borges Agricultural and Profithol 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 Profithol SA are associated (or correlated) with Borges Agricultural. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Borges Agricultural has no effect on the direction of Profithol i.e., Profithol and Borges Agricultural go up and down completely randomly.

Pair Corralation between Profithol and Borges Agricultural

Assuming the 90 days trading horizon Profithol SA is expected to generate 6.83 times more return on investment than Borges Agricultural. However, Profithol is 6.83 times more volatile than Borges Agricultural Industrial. It trades about 0.09 of its potential returns per unit of risk. Borges Agricultural Industrial is currently generating about 0.06 per unit of risk. If you would invest  39.00  in Profithol SA on September 12, 2024 and sell it today you would earn a total of  15.00  from holding Profithol SA or generate 38.46% return on investment over 90 days.

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

Profithol SA  vs.  Borges Agricultural Industrial

Profithol SA

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Profithol SA are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical indicators, Profithol exhibited solid returns over the last few months and may actually be approaching a breakup point.

Borges Agricultural

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Borges Agricultural Industrial are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, Borges Agricultural may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Profithol and Borges Agricultural

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

The idea behind Profithol SA and Borges Agricultural Industrial 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.