Correlation Between Forafric Global and Golden Agri

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

By analyzing existing cross correlation between Forafric Global PLC and Golden Agri Resources, you can compare the effects of market volatilities on Forafric Global and Golden Agri 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 Forafric Global with a short position of Golden Agri. Check out your portfolio center. Please also check ongoing floating volatility patterns of Forafric Global and Golden Agri.

Diversification Opportunities for Forafric Global and Golden Agri

0.02

Correlation Coefficient

Forafric Global  Golden Agri

Significant diversification

The 3 months correlation between Forafric and Golden is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Forafric Global PLC and Golden Agri Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Golden Agri Resources and Forafric Global 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 Forafric Global PLC are associated (or correlated) with Golden Agri. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Golden Agri Resources has no effect on the direction of Forafric Global i.e., Forafric Global and Golden Agri go up and down completely randomly.

Pair Corralation between Forafric Global and Golden Agri

Given the investment horizon of 90 days Forafric Global PLC is expected to under-perform the Golden Agri. In addition to that, Forafric Global is 1.18 times more volatile than Golden Agri Resources. It trades about -0.1 of its total potential returns per unit of risk. Golden Agri Resources is currently generating about -0.1 per unit of volatility. If you would invest  2,181  in Golden Agri Resources on September 5, 2024 and sell it today you would lose (181.00) from holding Golden Agri Resources or give up 8.3% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Forafric Global PLC  vs.  Golden Agri Resources

Forafric Global PLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Forafric Global PLC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Golden Agri Resources

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Golden Agri Resources has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Forafric Global and Golden Agri

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

The idea behind Forafric Global PLC and Golden Agri Resources 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 Stocks Directory module to find actively traded stocks across global markets.