Correlation Between E I and Bioceres Crop

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

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

Diversification Opportunities for E I and Bioceres Crop

0.8

Correlation Coefficient

E I  Bioceres Crop

Very poor diversification

The 3 months correlation between CTA-PA and Bioceres is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding E I du and Bioceres Crop Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bioceres Crop Solutions and E I 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 E I du are associated (or correlated) with Bioceres Crop. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bioceres Crop Solutions has no effect on the direction of E I i.e., E I and Bioceres Crop go up and down completely randomly.

Pair Corralation between E I and Bioceres Crop

Assuming the 90 days trading horizon E I du is expected to generate 1.05 times more return on investment than Bioceres Crop. However, E I is 1.05 times more volatile than Bioceres Crop Solutions. It trades about 0.01 of its potential returns per unit of risk. Bioceres Crop Solutions is currently generating about -0.04 per unit of risk. If you would invest  5,595  in E I du on September 26, 2024 and sell it today you would earn a total of  15.00  from holding E I du or generate 0.27% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.99%
Values	Daily Returns

E I du  vs.  Bioceres Crop Solutions

E I du

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days E I du has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Preferred Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

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 weak 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.

Pair Trading with E I and Bioceres Crop

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

The idea behind E I du and Bioceres Crop Solutions 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.