Correlation Between Dole PLC and Adecoagro

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

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

Diversification Opportunities for Dole PLC and Adecoagro

0.37

Correlation Coefficient

Dole PLC  Adecoagro

Weak diversification

The 3 months correlation between Dole and Adecoagro is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Dole PLC and Adecoagro SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Adecoagro SA and Dole PLC 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 Dole PLC 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 Dole PLC i.e., Dole PLC and Adecoagro go up and down completely randomly.

Pair Corralation between Dole PLC and Adecoagro

Given the investment horizon of 90 days Dole PLC is expected to under-perform the Adecoagro. In addition to that, Dole PLC is 1.21 times more volatile than Adecoagro SA. It trades about -0.04 of its total potential returns per unit of risk. Adecoagro SA is currently generating about 0.0 per unit of volatility. If you would invest  1,084  in Adecoagro SA on August 30, 2024 and sell it today you would lose (9.00) from holding Adecoagro SA or give up 0.83% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.44%
Values	Daily Returns

Dole PLC  vs.  Adecoagro SA

Dole PLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Dole PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound essential indicators, Dole PLC is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Adecoagro SA

Risk-Adjusted Performance

0 of 100

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 Dole PLC and Adecoagro

The main advantage of trading using opposite Dole PLC and Adecoagro positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dole PLC 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 Dole PLC 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.

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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.