Correlation Between Cal Maine and Adecoagro
Can any of the company-specific risk be diversified away by investing in both Cal Maine 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 Cal Maine and Adecoagro into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cal Maine Foods and Adecoagro SA, you can compare the effects of market volatilities on Cal Maine 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 Cal Maine with a short position of Adecoagro. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cal Maine and Adecoagro.
Diversification Opportunities for Cal Maine and Adecoagro
Poor diversification
The 3 months correlation between Cal and Adecoagro is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Cal Maine Foods and Adecoagro SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Adecoagro SA and Cal Maine 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 Cal Maine Foods 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 Cal Maine i.e., Cal Maine and Adecoagro go up and down completely randomly.
Pair Corralation between Cal Maine and Adecoagro
Given the investment horizon of 90 days Cal Maine Foods is expected to under-perform the Adecoagro. But the stock apears to be less risky and, when comparing its historical volatility, Cal Maine Foods is 1.48 times less risky than Adecoagro. The stock trades about -0.03 of its potential returns per unit of risk. The Adecoagro SA is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 1,080 in Adecoagro SA on January 26, 2024 and sell it today you would earn a total of 27.00 from holding Adecoagro SA or generate 2.5% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Cal Maine Foods vs. Adecoagro SA
Performance |
Timeline |
Cal Maine Foods |
Adecoagro SA |
Cal Maine and Adecoagro Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Cal Maine and Adecoagro
The main advantage of trading using opposite Cal Maine and Adecoagro positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cal Maine 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.Cal Maine vs. Bunge Limited | Cal Maine vs. Tyson Foods | Cal Maine vs. Dole PLC | Cal Maine vs. Adecoagro SA |
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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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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