Correlation Between Limoneira and Shineco

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

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

Diversification Opportunities for Limoneira and Shineco

-0.26

Correlation Coefficient

Limoneira  Shineco

Very good diversification

The 3 months correlation between Limoneira and Shineco is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Limoneira Co and Shineco in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shineco 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 Shineco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shineco has no effect on the direction of Limoneira i.e., Limoneira and Shineco go up and down completely randomly.

Pair Corralation between Limoneira and Shineco

Given the investment horizon of 90 days Limoneira Co is expected to generate 0.24 times more return on investment than Shineco. However, Limoneira Co is 4.11 times less risky than Shineco. It trades about 0.01 of its potential returns per unit of risk. Shineco is currently generating about -0.23 per unit of risk. If you would invest  2,686  in Limoneira Co on September 18, 2024 and sell it today you would lose (10.00) from holding Limoneira Co or give up 0.37% of portfolio value over 90 days.

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

Limoneira Co  vs.  Shineco

Limoneira

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Limoneira Co has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Limoneira is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Shineco

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Shineco has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in January 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with Limoneira and Shineco

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

The idea behind Limoneira Co and Shineco 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.