Correlation Between CropEnergies and Superior Plus

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

By analyzing existing cross correlation between CropEnergies AG and Superior Plus Corp, you can compare the effects of market volatilities on CropEnergies and Superior Plus 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 CropEnergies with a short position of Superior Plus. Check out your portfolio center. Please also check ongoing floating volatility patterns of CropEnergies and Superior Plus.

Diversification Opportunities for CropEnergies and Superior Plus

0.25

Correlation Coefficient

CropEnergies  Superior Plus

Modest diversification

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

Pair Corralation between CropEnergies and Superior Plus

Assuming the 90 days horizon CropEnergies AG is expected to generate 1.02 times more return on investment than Superior Plus. However, CropEnergies is 1.02 times more volatile than Superior Plus Corp. It trades about 0.09 of its potential returns per unit of risk. Superior Plus Corp is currently generating about 0.08 per unit of risk. If you would invest  1,110  in CropEnergies AG on February 28, 2024 and sell it today you would earn a total of  80.00  from holding CropEnergies AG or generate 7.21% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.39%
Values	Daily Returns

CropEnergies AG  vs.  Superior Plus Corp

CropEnergies AG

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in CropEnergies AG are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, CropEnergies may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Superior Plus Corp

Risk-Adjusted Performance

6 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Superior Plus Corp are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Superior Plus may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Pair Trading with CropEnergies and Superior Plus

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

The idea behind CropEnergies AG and Superior Plus Corp 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.