Correlation Between All Iron and Borges Agricultural

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

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

Diversification Opportunities for All Iron and Borges Agricultural

0.13

Correlation Coefficient

All Iron  Borges Agricultural

Average diversification

The 3 months correlation between All and Borges is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding All Iron Re and Borges Agricultural Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Borges Agricultural and All Iron 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 All Iron Re 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 All Iron i.e., All Iron and Borges Agricultural go up and down completely randomly.

Pair Corralation between All Iron and Borges Agricultural

Assuming the 90 days trading horizon All Iron Re is expected to generate 4.57 times more return on investment than Borges Agricultural. However, All Iron is 4.57 times more volatile than Borges Agricultural Industrial. It trades about 0.06 of its potential returns per unit of risk. Borges Agricultural Industrial is currently generating about 0.03 per unit of risk. If you would invest  1,050  in All Iron Re on October 20, 2024 and sell it today you would earn a total of  50.00  from holding All Iron Re or generate 4.76% return on investment over 90 days.

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

All Iron Re  vs.  Borges Agricultural Industrial

All Iron Re

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in All Iron Re are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound fundamental indicators, All Iron is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Borges Agricultural

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Borges Agricultural Industrial are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound fundamental indicators, Borges Agricultural is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with All Iron and Borges Agricultural

The main advantage of trading using opposite All Iron and Borges Agricultural positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if All Iron 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 All Iron Re 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 Stocks Directory module to find actively traded stocks across global markets.