Correlation Between LANSON BCC and MASI AGRICOLA

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

By analyzing existing cross correlation between LANSON BCC INH EO and MASI AGRICOLA SPA, you can compare the effects of market volatilities on LANSON BCC and MASI AGRICOLA 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 LANSON BCC with a short position of MASI AGRICOLA. Check out your portfolio center. Please also check ongoing floating volatility patterns of LANSON BCC and MASI AGRICOLA.

Diversification Opportunities for LANSON BCC and MASI AGRICOLA

0.52

Correlation Coefficient

LANSON BCC  MASI AGRICOLA

Very weak diversification

The 3 months correlation between LANSON and MASI is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding LANSON BCC INH EO and MASI AGRICOLA SPA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MASI AGRICOLA SPA and LANSON BCC 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 LANSON BCC INH EO are associated (or correlated) with MASI AGRICOLA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MASI AGRICOLA SPA has no effect on the direction of LANSON BCC i.e., LANSON BCC and MASI AGRICOLA go up and down completely randomly.

Pair Corralation between LANSON BCC and MASI AGRICOLA

Assuming the 90 days horizon LANSON BCC INH EO is expected to under-perform the MASI AGRICOLA. But the stock apears to be less risky and, when comparing its historical volatility, LANSON BCC INH EO is 1.12 times less risky than MASI AGRICOLA. The stock trades about -0.15 of its potential returns per unit of risk. The MASI AGRICOLA SPA is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest  430.00  in MASI AGRICOLA SPA on September 26, 2024 and sell it today you would lose (15.00) from holding MASI AGRICOLA SPA or give up 3.49% of portfolio value over 90 days.

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

LANSON BCC INH EO  vs.  MASI AGRICOLA SPA

LANSON BCC INH

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days LANSON BCC INH EO 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 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.

MASI AGRICOLA SPA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MASI AGRICOLA SPA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, MASI AGRICOLA is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with LANSON BCC and MASI AGRICOLA

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

The idea behind LANSON BCC INH EO and MASI AGRICOLA SPA 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.