Correlation Between Brasilagro Adr and Edible Garden

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

By analyzing existing cross correlation between Brasilagro Adr and Edible Garden AG, you can compare the effects of market volatilities on Brasilagro Adr and Edible Garden 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 Brasilagro Adr with a short position of Edible Garden. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brasilagro Adr and Edible Garden.

Diversification Opportunities for Brasilagro Adr and Edible Garden

-0.34

Correlation Coefficient

Brasilagro Adr  Edible Garden

Very good diversification

The 3 months correlation between Brasilagro and Edible is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Brasilagro Adr and Edible Garden AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Edible Garden AG and Brasilagro Adr 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 Brasilagro Adr are associated (or correlated) with Edible Garden. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Edible Garden AG has no effect on the direction of Brasilagro Adr i.e., Brasilagro Adr and Edible Garden go up and down completely randomly.

Pair Corralation between Brasilagro Adr and Edible Garden

Considering the 90-day investment horizon Brasilagro Adr is expected to under-perform the Edible Garden. But the stock apears to be less risky and, when comparing its historical volatility, Brasilagro Adr is 121.02 times less risky than Edible Garden. The stock trades about -0.09 of its potential returns per unit of risk. The Edible Garden AG is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  2.09  in Edible Garden AG on September 26, 2024 and sell it today you would earn a total of  7.01  from holding Edible Garden AG or generate 335.41% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	78.4%
Values	Daily Returns

Brasilagro Adr  vs.  Edible Garden AG

Brasilagro Adr

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Brasilagro Adr has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of conflicting performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Edible Garden AG

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Edible Garden AG are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile essential indicators, Edible Garden showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Brasilagro Adr and Edible Garden

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

The idea behind Brasilagro Adr and Edible Garden AG 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.