Correlation Between Archer Daniels and Planet Green

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

By analyzing existing cross correlation between Archer Daniels Midland and Planet Green Holdings, you can compare the effects of market volatilities on Archer Daniels and Planet Green 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 Archer Daniels with a short position of Planet Green. Check out your portfolio center. Please also check ongoing floating volatility patterns of Archer Daniels and Planet Green.

Diversification Opportunities for Archer Daniels and Planet Green

-0.65

Correlation Coefficient

Archer Daniels  Planet Green

Excellent diversification

The 3 months correlation between Archer and Planet is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Archer Daniels Midland and Planet Green Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Planet Green Holdings and Archer Daniels 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 Archer Daniels Midland are associated (or correlated) with Planet Green. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Planet Green Holdings has no effect on the direction of Archer Daniels i.e., Archer Daniels and Planet Green go up and down completely randomly.

Pair Corralation between Archer Daniels and Planet Green

Considering the 90-day investment horizon Archer Daniels Midland is expected to under-perform the Planet Green. But the stock apears to be less risky and, when comparing its historical volatility, Archer Daniels Midland is 3.52 times less risky than Planet Green. The stock trades about -0.04 of its potential returns per unit of risk. The Planet Green Holdings is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  350.00  in Planet Green Holdings on September 14, 2024 and sell it today you would lose (87.86) from holding Planet Green Holdings or give up 25.1% of portfolio value over 90 days.

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

Archer Daniels Midland  vs.  Planet Green Holdings

Archer Daniels Midland

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Archer Daniels Midland has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's fundamental indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Planet Green Holdings

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Planet Green Holdings are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Planet Green reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Archer Daniels and Planet Green

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

The idea behind Archer Daniels Midland and Planet Green Holdings 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.