Correlation Between Vodka Brands and Agriculture Natural

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

By analyzing existing cross correlation between Vodka Brands Corp and Agriculture Natural Solutions, you can compare the effects of market volatilities on Vodka Brands and Agriculture Natural 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 Vodka Brands with a short position of Agriculture Natural. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vodka Brands and Agriculture Natural.

Diversification Opportunities for Vodka Brands and Agriculture Natural

-0.08

Correlation Coefficient

Vodka Brands  Agriculture Natural

Good diversification

The 3 months correlation between Vodka and Agriculture is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Vodka Brands Corp and Agriculture Natural Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Agriculture Natural and Vodka Brands 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 Vodka Brands Corp are associated (or correlated) with Agriculture Natural. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Agriculture Natural has no effect on the direction of Vodka Brands i.e., Vodka Brands and Agriculture Natural go up and down completely randomly.

Pair Corralation between Vodka Brands and Agriculture Natural

Given the investment horizon of 90 days Vodka Brands is expected to generate 1.45 times less return on investment than Agriculture Natural. But when comparing it to its historical volatility, Vodka Brands Corp is 3.0 times less risky than Agriculture Natural. It trades about 0.1 of its potential returns per unit of risk. Agriculture Natural Solutions is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  27.00  in Agriculture Natural Solutions on September 25, 2024 and sell it today you would lose (1.50) from holding Agriculture Natural Solutions or give up 5.56% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	78.57%
Values	Daily Returns

Vodka Brands Corp  vs.  Agriculture Natural Solutions

Vodka Brands Corp

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Vodka Brands Corp are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong forward-looking signals, Vodka Brands is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Agriculture Natural

Risk-Adjusted Performance

3 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Agriculture Natural Solutions are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady fundamental indicators, Agriculture Natural showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Vodka Brands and Agriculture Natural

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

The idea behind Vodka Brands Corp and Agriculture Natural Solutions 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.