Correlation Between Bioceres Crop and Nutrien

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

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

Diversification Opportunities for Bioceres Crop and Nutrien

-0.27

Correlation Coefficient

Bioceres Crop  Nutrien

Very good diversification

The 3 months correlation between Bioceres and Nutrien is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Bioceres Crop Solutions and Nutrien in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nutrien and Bioceres Crop 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 Bioceres Crop Solutions are associated (or correlated) with Nutrien. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nutrien has no effect on the direction of Bioceres Crop i.e., Bioceres Crop and Nutrien go up and down completely randomly.

Pair Corralation between Bioceres Crop and Nutrien

Given the investment horizon of 90 days Bioceres Crop Solutions is expected to under-perform the Nutrien. In addition to that, Bioceres Crop is 2.12 times more volatile than Nutrien. It trades about -0.2 of its total potential returns per unit of risk. Nutrien is currently generating about 0.02 per unit of volatility. If you would invest  4,592  in Nutrien on September 3, 2024 and sell it today you would earn a total of  74.00  from holding Nutrien or generate 1.61% return on investment over 90 days.

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

Bioceres Crop Solutions  vs.  Nutrien

Bioceres Crop Solutions

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bioceres Crop Solutions has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Nutrien

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Nutrien are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Nutrien is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Bioceres Crop and Nutrien

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

The idea behind Bioceres Crop Solutions and Nutrien 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.