Correlation Between Abak SA and Agroliga Group

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

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

Diversification Opportunities for Abak SA and Agroliga Group

0.0

Correlation Coefficient

Abak SA  Agroliga Group

Pay attention - limited upside

The 3 months correlation between Abak and Agroliga is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Abak SA and Agroliga Group PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Agroliga Group PLC and Abak SA 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 Abak SA are associated (or correlated) with Agroliga Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Agroliga Group PLC has no effect on the direction of Abak SA i.e., Abak SA and Agroliga Group go up and down completely randomly.

Pair Corralation between Abak SA and Agroliga Group

Assuming the 90 days trading horizon Abak SA is expected to under-perform the Agroliga Group. But the stock apears to be less risky and, when comparing its historical volatility, Abak SA is 1.18 times less risky than Agroliga Group. The stock trades about -0.22 of its potential returns per unit of risk. The Agroliga Group PLC is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest  1,950  in Agroliga Group PLC on September 26, 2024 and sell it today you would lose (140.00) from holding Agroliga Group PLC or give up 7.18% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	37.5%
Values	Daily Returns

Abak SA  vs.  Agroliga Group PLC

Abak SA

Risk-Adjusted Performance

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Very Weak

Over the last 90 days Abak SA has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Agroliga Group PLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Agroliga Group PLC has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Agroliga Group is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Abak SA and Agroliga Group

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

The idea behind Abak SA and Agroliga Group PLC 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.