Correlation Between Clean Seas and Village Farms

Can any of the company-specific risk be diversified away by investing in both Clean Seas and Village Farms 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 Village Farms 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 Village Farms International, you can compare the effects of market volatilities on Clean Seas and Village Farms 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 Village Farms. Check out your portfolio center. Please also check ongoing floating volatility patterns of Clean Seas and Village Farms.

Diversification Opportunities for Clean Seas and Village Farms

0.37

Correlation Coefficient

Clean Seas  Village Farms

Weak diversification

The 3 months correlation between Clean and Village is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Clean Seas Seafood and Village Farms International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Village Farms Intern 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 Village Farms. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Village Farms Intern has no effect on the direction of Clean Seas i.e., Clean Seas and Village Farms go up and down completely randomly.

Pair Corralation between Clean Seas and Village Farms

Assuming the 90 days horizon Clean Seas Seafood is expected to under-perform the Village Farms. In addition to that, Clean Seas is 1.88 times more volatile than Village Farms International. It trades about -0.13 of its total potential returns per unit of risk. Village Farms International is currently generating about -0.06 per unit of volatility. If you would invest  91.00  in Village Farms International on September 25, 2024 and sell it today you would lose (14.00) from holding Village Farms International or give up 15.38% of portfolio value over 90 days.

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

Clean Seas Seafood  vs.  Village Farms International

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.

Village Farms Intern

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Village Farms International has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's technical and fundamental 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.

Pair Trading with Clean Seas and Village Farms

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

The idea behind Clean Seas Seafood and Village Farms International 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.