Correlation Between Agrogeneration and Stef SA

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

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

Diversification Opportunities for Agrogeneration and Stef SA

0.32

Correlation Coefficient

Agrogeneration  Stef SA

Weak diversification

The 3 months correlation between Agrogeneration and Stef is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Agrogeneration and Stef SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stef SA and Agrogeneration 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 Agrogeneration are associated (or correlated) with Stef SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stef SA has no effect on the direction of Agrogeneration i.e., Agrogeneration and Stef SA go up and down completely randomly.

Pair Corralation between Agrogeneration and Stef SA

Assuming the 90 days trading horizon Agrogeneration is expected to generate 5.04 times more return on investment than Stef SA. However, Agrogeneration is 5.04 times more volatile than Stef SA. It trades about 0.06 of its potential returns per unit of risk. Stef SA is currently generating about -0.1 per unit of risk. If you would invest  5.30  in Agrogeneration on September 26, 2024 and sell it today you would earn a total of  0.62  from holding Agrogeneration or generate 11.7% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.46%
Values	Daily Returns

Agrogeneration  vs.  Stef SA

Agrogeneration

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Agrogeneration are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Agrogeneration reported solid returns over the last few months and may actually be approaching a breakup point.

Stef SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Stef SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's technical and fundamental 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 Agrogeneration and Stef SA

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

The idea behind Agrogeneration and Stef SA 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.