Correlation Between IM Vinaria and Germina Agribusiness

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

By analyzing existing cross correlation between IM Vinaria Purcari and Germina Agribusiness SA, you can compare the effects of market volatilities on IM Vinaria and Germina Agribusiness 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 IM Vinaria with a short position of Germina Agribusiness. Check out your portfolio center. Please also check ongoing floating volatility patterns of IM Vinaria and Germina Agribusiness.

Diversification Opportunities for IM Vinaria and Germina Agribusiness

0.25

Correlation Coefficient

IM Vinaria  Germina Agribusiness

Modest diversification

The 3 months correlation between WINE and Germina is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding IM Vinaria Purcari and Germina Agribusiness SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Germina Agribusiness and IM Vinaria 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 IM Vinaria Purcari are associated (or correlated) with Germina Agribusiness. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Germina Agribusiness has no effect on the direction of IM Vinaria i.e., IM Vinaria and Germina Agribusiness go up and down completely randomly.

Pair Corralation between IM Vinaria and Germina Agribusiness

Assuming the 90 days trading horizon IM Vinaria Purcari is expected to generate 0.44 times more return on investment than Germina Agribusiness. However, IM Vinaria Purcari is 2.25 times less risky than Germina Agribusiness. It trades about -0.19 of its potential returns per unit of risk. Germina Agribusiness SA is currently generating about -0.1 per unit of risk. If you would invest  1,460  in IM Vinaria Purcari on October 24, 2024 and sell it today you would lose (20.00) from holding IM Vinaria Purcari or give up 1.37% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	93.33%
Values	Daily Returns

IM Vinaria Purcari  vs.  Germina Agribusiness SA

IM Vinaria Purcari

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days IM Vinaria Purcari has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, IM Vinaria is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.

Germina Agribusiness

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Germina Agribusiness SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Germina Agribusiness is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with IM Vinaria and Germina Agribusiness

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

The idea behind IM Vinaria Purcari and Germina Agribusiness SA 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.