Correlation Between Golden Agri and Village Farms
Can any of the company-specific risk be diversified away by investing in both Golden Agri and Village Farms 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 Golden Agri and Village Farms into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Golden Agri Resources and Village Farms International, you can compare the effects of market volatilities on Golden Agri and Village Farms 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 Golden Agri with a short position of Village Farms. Check out your portfolio center. Please also check ongoing floating volatility patterns of Golden Agri and Village Farms.
Diversification Opportunities for Golden Agri and Village Farms
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Golden and Village is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Golden Agri Resources and Village Farms International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Village Farms Intern and Golden Agri 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 Golden Agri Resources are associated (or correlated) with Village Farms. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Village Farms Intern has no effect on the direction of Golden Agri i.e., Golden Agri and Village Farms go up and down completely randomly.
Pair Corralation between Golden Agri and Village Farms
Assuming the 90 days horizon Golden Agri Resources is expected to generate 0.67 times more return on investment than Village Farms. However, Golden Agri Resources is 1.48 times less risky than Village Farms. It trades about 0.03 of its potential returns per unit of risk. Village Farms International is currently generating about -0.01 per unit of risk. If you would invest 1,603 in Golden Agri Resources on March 21, 2024 and sell it today you would earn a total of 347.00 from holding Golden Agri Resources or generate 21.65% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 64.92% |
Values | Daily Returns |
Golden Agri Resources vs. Village Farms International
Performance |
Timeline |
Golden Agri Resources |
Village Farms Intern |
Golden Agri and Village Farms Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Golden Agri and Village Farms
The main advantage of trading using opposite Golden Agri and Village Farms positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Golden Agri position performs unexpectedly, Village Farms 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 Village Farms will offset losses from the drop in Village Farms' long position.Golden Agri vs. Limoneira Co | Golden Agri vs. Fresh Del Monte | Golden Agri vs. Vital Farms | Golden Agri vs. Alico Inc |
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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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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