Correlation Between Golden Agri and AquaBounty Technologies

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

By analyzing existing cross correlation between Golden Agri Resources and AquaBounty Technologies, you can compare the effects of market volatilities on Golden Agri and AquaBounty Technologies 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 Golden Agri with a short position of AquaBounty Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Golden Agri and AquaBounty Technologies.

Diversification Opportunities for Golden Agri and AquaBounty Technologies

0.8

Correlation Coefficient

Golden Agri  AquaBounty Technologies

Very poor diversification

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

Pair Corralation between Golden Agri and AquaBounty Technologies

Assuming the 90 days horizon Golden Agri Resources is expected to generate 0.96 times more return on investment than AquaBounty Technologies. However, Golden Agri Resources is 1.04 times less risky than AquaBounty Technologies. It trades about -0.16 of its potential returns per unit of risk. AquaBounty Technologies is currently generating about -0.17 per unit of risk. If you would invest  24.00  in Golden Agri Resources on September 25, 2024 and sell it today you would lose (11.00) from holding Golden Agri Resources or give up 45.83% of portfolio value over 90 days.

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

Golden Agri Resources  vs.  AquaBounty Technologies

Golden Agri Resources

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Golden Agri Resources 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.

AquaBounty Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AquaBounty Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain somewhat 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 Golden Agri and AquaBounty Technologies

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

The idea behind Golden Agri Resources and AquaBounty Technologies 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.