Correlation Between Anheuser Busch and Adecoagro

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

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

Diversification Opportunities for Anheuser Busch and Adecoagro

-0.64

Correlation Coefficient

Anheuser Busch  Adecoagro

Excellent diversification

The 3 months correlation between Anheuser and Adecoagro is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Anheuser Busch Inbev and Adecoagro SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Adecoagro SA and Anheuser Busch 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 Anheuser Busch Inbev are associated (or correlated) with Adecoagro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Adecoagro SA has no effect on the direction of Anheuser Busch i.e., Anheuser Busch and Adecoagro go up and down completely randomly.

Pair Corralation between Anheuser Busch and Adecoagro

Considering the 90-day investment horizon Anheuser Busch Inbev is expected to under-perform the Adecoagro. But the stock apears to be less risky and, when comparing its historical volatility, Anheuser Busch Inbev is 1.44 times less risky than Adecoagro. The stock trades about -0.05 of its potential returns per unit of risk. The Adecoagro SA is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  992.00  in Adecoagro SA on January 24, 2024 and sell it today you would earn a total of  122.00  from holding Adecoagro SA or generate 12.3% return on investment over 90 days.

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

Anheuser Busch Inbev  vs.  Adecoagro SA

Anheuser Busch Inbev

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Anheuser Busch Inbev has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Anheuser Busch is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Adecoagro SA

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Adecoagro SA are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very fragile basic indicators, Adecoagro displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Anheuser Busch and Adecoagro

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

The idea behind Anheuser Busch Inbev and Adecoagro 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.