Correlation Between Bioceres Crop and Intrepid Potash

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

By analyzing existing cross correlation between Bioceres Crop Solutions and Intrepid Potash, you can compare the effects of market volatilities on Bioceres Crop and Intrepid Potash 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 Bioceres Crop with a short position of Intrepid Potash. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bioceres Crop and Intrepid Potash.

Diversification Opportunities for Bioceres Crop and Intrepid Potash

0.03

Correlation Coefficient

Bioceres Crop  Intrepid Potash

Significant diversification

The 3 months correlation between Bioceres and Intrepid is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Bioceres Crop Solutions and Intrepid Potash in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Intrepid Potash and Bioceres Crop 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 Bioceres Crop Solutions are associated (or correlated) with Intrepid Potash. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Intrepid Potash has no effect on the direction of Bioceres Crop i.e., Bioceres Crop and Intrepid Potash go up and down completely randomly.

Pair Corralation between Bioceres Crop and Intrepid Potash

Given the investment horizon of 90 days Bioceres Crop Solutions is expected to under-perform the Intrepid Potash. But the stock apears to be less risky and, when comparing its historical volatility, Bioceres Crop Solutions is 3.33 times less risky than Intrepid Potash. The stock trades about -0.29 of its potential returns per unit of risk. The Intrepid Potash is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  1,893  in Intrepid Potash on January 26, 2024 and sell it today you would earn a total of  80.00  from holding Intrepid Potash or generate 4.23% return on investment over 90 days.

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

Bioceres Crop Solutions  vs.  Intrepid Potash

Bioceres Crop Solutions

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bioceres Crop Solutions has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in May 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Intrepid Potash

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Intrepid Potash has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Intrepid Potash is not utilizing all of its potentials. The newest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Bioceres Crop and Intrepid Potash

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

The idea behind Bioceres Crop Solutions and Intrepid Potash 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.