Correlation Between Alico and Golden Agri

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

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

Diversification Opportunities for Alico and Golden Agri

-0.31

Correlation Coefficient

Alico  Golden Agri

Very good diversification

The 3 months correlation between Alico and Golden is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Alico Inc 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 Alico 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 Alico Inc 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 Alico i.e., Alico and Golden Agri go up and down completely randomly.

Pair Corralation between Alico and Golden Agri

Given the investment horizon of 90 days Alico Inc is expected to under-perform the Golden Agri. In addition to that, Alico is 2.12 times more volatile than Golden Agri Resources. It trades about -0.03 of its total potential returns per unit of risk. Golden Agri Resources is currently generating about -0.01 per unit of volatility. If you would invest  2,095  in Golden Agri Resources on September 25, 2024 and sell it today you would lose (15.00) from holding Golden Agri Resources or give up 0.72% of portfolio value over 90 days.

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

Alico Inc  vs.  Golden Agri Resources

Alico Inc

Risk-Adjusted Performance

0 of 100

Very Weak

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

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 fairly strong basic indicators, Golden Agri is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Alico and Golden Agri

The main advantage of trading using opposite Alico and Golden Agri positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alico 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 Alico Inc 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.