Correlation Between Adecoagro and Forafric Global

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

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

Diversification Opportunities for Adecoagro and Forafric Global

-0.01

Correlation Coefficient

Adecoagro  Forafric Global

Good diversification

The 3 months correlation between Adecoagro and Forafric is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Adecoagro SA and Forafric Global PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Forafric Global PLC and Adecoagro 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 Adecoagro SA are associated (or correlated) with Forafric Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Forafric Global PLC has no effect on the direction of Adecoagro i.e., Adecoagro and Forafric Global go up and down completely randomly.

Pair Corralation between Adecoagro and Forafric Global

Given the investment horizon of 90 days Adecoagro SA is expected to under-perform the Forafric Global. In addition to that, Adecoagro is 1.71 times more volatile than Forafric Global PLC. It trades about -0.08 of its total potential returns per unit of risk. Forafric Global PLC is currently generating about -0.01 per unit of volatility. If you would invest  1,028  in Forafric Global PLC on September 1, 2024 and sell it today you would lose (5.00) from holding Forafric Global PLC or give up 0.49% of portfolio value over 90 days.

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

Adecoagro SA  vs.  Forafric Global PLC

Adecoagro SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Adecoagro SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Adecoagro is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

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.

Pair Trading with Adecoagro and Forafric Global

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

The idea behind Adecoagro SA and Forafric Global 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.