Correlation Between Clean Seas and Brasilagro Adr

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

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

Diversification Opportunities for Clean Seas and Brasilagro Adr

0.63

Correlation Coefficient

Clean Seas  Brasilagro Adr

Poor diversification

The 3 months correlation between Clean and Brasilagro is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Clean Seas Seafood and Brasilagro Adr in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brasilagro Adr and Clean Seas 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 Clean Seas Seafood are associated (or correlated) with Brasilagro Adr. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brasilagro Adr has no effect on the direction of Clean Seas i.e., Clean Seas and Brasilagro Adr go up and down completely randomly.

Pair Corralation between Clean Seas and Brasilagro Adr

Assuming the 90 days horizon Clean Seas Seafood is expected to under-perform the Brasilagro Adr. In addition to that, Clean Seas is 3.42 times more volatile than Brasilagro Adr. It trades about -0.12 of its total potential returns per unit of risk. Brasilagro Adr is currently generating about -0.09 per unit of volatility. If you would invest  431.00  in Brasilagro Adr on September 26, 2024 and sell it today you would lose (71.00) from holding Brasilagro Adr or give up 16.47% of portfolio value over 90 days.

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

Clean Seas Seafood  vs.  Brasilagro Adr

Clean Seas Seafood

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Clean Seas Seafood has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Brasilagro Adr

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Brasilagro Adr has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of conflicting performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Clean Seas and Brasilagro Adr

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

The idea behind Clean Seas Seafood and Brasilagro Adr 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.