Correlation Between Limoneira and AquaBounty Technologies

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

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

Diversification Opportunities for Limoneira and AquaBounty Technologies

0.25

Correlation Coefficient

Limoneira  AquaBounty Technologies

Modest diversification

The 3 months correlation between Limoneira and AquaBounty is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Limoneira Co and AquaBounty Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AquaBounty Technologies and Limoneira 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 Limoneira Co 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 Limoneira i.e., Limoneira and AquaBounty Technologies go up and down completely randomly.

Pair Corralation between Limoneira and AquaBounty Technologies

Given the investment horizon of 90 days Limoneira Co is expected to generate 0.39 times more return on investment than AquaBounty Technologies. However, Limoneira Co is 2.53 times less risky than AquaBounty Technologies. It trades about 0.12 of its potential returns per unit of risk. AquaBounty Technologies is currently generating about 0.02 per unit of risk. If you would invest  2,411  in Limoneira Co on September 3, 2024 and sell it today you would earn a total of  369.00  from holding Limoneira Co or generate 15.3% return on investment over 90 days.

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

Limoneira Co  vs.  AquaBounty Technologies

Limoneira

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Limoneira Co are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady basic indicators, Limoneira reported solid returns over the last few months and may actually be approaching a breakup point.

AquaBounty Technologies

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in AquaBounty Technologies are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, AquaBounty Technologies is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Limoneira and AquaBounty Technologies

The main advantage of trading using opposite Limoneira and AquaBounty Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Limoneira 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 Limoneira Co 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.