Correlation Between Borges Agricultural and All Iron

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

By analyzing existing cross correlation between Borges Agricultural Industrial and All Iron Re, you can compare the effects of market volatilities on Borges Agricultural and All Iron 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 Borges Agricultural with a short position of All Iron. Check out your portfolio center. Please also check ongoing floating volatility patterns of Borges Agricultural and All Iron.

Diversification Opportunities for Borges Agricultural and All Iron

0.55

Correlation Coefficient

Borges Agricultural  All Iron

Very weak diversification

The 3 months correlation between Borges and All is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Borges Agricultural Industrial and All Iron Re in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on All Iron Re and Borges Agricultural 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 Borges Agricultural Industrial are associated (or correlated) with All Iron. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of All Iron Re has no effect on the direction of Borges Agricultural i.e., Borges Agricultural and All Iron go up and down completely randomly.

Pair Corralation between Borges Agricultural and All Iron

Assuming the 90 days trading horizon Borges Agricultural is expected to generate 1.3 times less return on investment than All Iron. In addition to that, Borges Agricultural is 1.51 times more volatile than All Iron Re. It trades about 0.06 of its total potential returns per unit of risk. All Iron Re is currently generating about 0.12 per unit of volatility. If you would invest  970.00  in All Iron Re on September 5, 2024 and sell it today you would earn a total of  120.00  from holding All Iron Re or generate 12.37% return on investment over 90 days.

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

Borges Agricultural Industrial  vs.  All Iron Re

Borges Agricultural

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Borges Agricultural Industrial are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, Borges Agricultural may actually be approaching a critical reversion point that can send shares even higher in January 2025.

All Iron Re

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in All Iron Re are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, All Iron may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Borges Agricultural and All Iron

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

The idea behind Borges Agricultural Industrial and All Iron Re 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.

Check out your portfolio center.

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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.