Correlation Between Pond Technologies and Limoneira

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

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

Diversification Opportunities for Pond Technologies and Limoneira

-0.19

Correlation Coefficient

Pond Technologies  Limoneira

Good diversification

The 3 months correlation between Pond and Limoneira is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Pond Technologies Holdings and Limoneira Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Limoneira and Pond Technologies 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 Pond Technologies Holdings are associated (or correlated) with Limoneira. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Limoneira has no effect on the direction of Pond Technologies i.e., Pond Technologies and Limoneira go up and down completely randomly.

Pair Corralation between Pond Technologies and Limoneira

Assuming the 90 days horizon Pond Technologies Holdings is expected to generate 11.03 times more return on investment than Limoneira. However, Pond Technologies is 11.03 times more volatile than Limoneira Co. It trades about 0.12 of its potential returns per unit of risk. Limoneira Co is currently generating about 0.04 per unit of risk. If you would invest  1.02  in Pond Technologies Holdings on September 15, 2024 and sell it today you would earn a total of  0.59  from holding Pond Technologies Holdings or generate 57.84% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.46%
Values	Daily Returns

Pond Technologies Holdings  vs.  Limoneira Co

Pond Technologies

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Pond Technologies Holdings are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak technical indicators, Pond Technologies reported solid returns over the last few months and may actually be approaching a breakup point.

Limoneira

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Limoneira Co are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. 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.

Pair Trading with Pond Technologies and Limoneira

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

The idea behind Pond Technologies Holdings and Limoneira Co 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.