Correlation Between Local Bounti and Golden Agri

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

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

Diversification Opportunities for Local Bounti and Golden Agri

0.25

Correlation Coefficient

Local Bounti  Golden Agri

Modest diversification

The 3 months correlation between Local and Golden is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Local Bounti Corp and Golden Agri Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Golden Agri Resources and Local Bounti 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 Local Bounti Corp are associated (or correlated) with Golden Agri. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Golden Agri Resources has no effect on the direction of Local Bounti i.e., Local Bounti and Golden Agri go up and down completely randomly.

Pair Corralation between Local Bounti and Golden Agri

Given the investment horizon of 90 days Local Bounti Corp is expected to under-perform the Golden Agri. In addition to that, Local Bounti is 3.32 times more volatile than Golden Agri Resources. It trades about -0.03 of its total potential returns per unit of risk. Golden Agri Resources is currently generating about 0.02 per unit of volatility. If you would invest  1,939  in Golden Agri Resources on September 12, 2024 and sell it today you would earn a total of  141.00  from holding Golden Agri Resources or generate 7.27% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	76.57%
Values	Daily Returns

Local Bounti Corp  vs.  Golden Agri Resources

Local Bounti Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Local Bounti Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's fundamental indicators remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Golden Agri Resources

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Golden Agri Resources are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, Golden Agri is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Local Bounti and Golden Agri

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

The idea behind Local Bounti Corp and Golden Agri Resources 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.