Correlation Between Dundee Corp and Adecoagro

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

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

Diversification Opportunities for Dundee Corp and Adecoagro

0.33

Correlation Coefficient

Dundee Corp  Adecoagro

Weak diversification

The 3 months correlation between Dundee and Adecoagro is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Dundee Corp and Adecoagro SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Adecoagro SA and Dundee Corp 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 Dundee Corp are associated (or correlated) with Adecoagro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Adecoagro SA has no effect on the direction of Dundee Corp i.e., Dundee Corp and Adecoagro go up and down completely randomly.

Pair Corralation between Dundee Corp and Adecoagro

Assuming the 90 days horizon Dundee Corp is expected to under-perform the Adecoagro. In addition to that, Dundee Corp is 1.18 times more volatile than Adecoagro SA. It trades about -0.28 of its total potential returns per unit of risk. Adecoagro SA is currently generating about -0.27 per unit of volatility. If you would invest  1,134  in Adecoagro SA on September 17, 2024 and sell it today you would lose (104.00) from holding Adecoagro SA or give up 9.17% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.24%
Values	Daily Returns

Dundee Corp  vs.  Adecoagro SA

Dundee Corp

Risk-Adjusted Performance

3 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Dundee Corp are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly inconsistent forward-looking indicators, Dundee Corp may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Adecoagro SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Adecoagro SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Adecoagro is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Dundee Corp and Adecoagro

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

The idea behind Dundee Corp and Adecoagro SA 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.