Correlation Between NaturalShrimp and Adecoagro

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

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

Diversification Opportunities for NaturalShrimp and Adecoagro

0.29

Correlation Coefficient

NaturalShrimp  Adecoagro

Modest diversification

The 3 months correlation between NaturalShrimp and Adecoagro is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding NaturalShrimp and Adecoagro SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Adecoagro SA and NaturalShrimp 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 NaturalShrimp are associated (or correlated) with Adecoagro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Adecoagro SA has no effect on the direction of NaturalShrimp i.e., NaturalShrimp and Adecoagro go up and down completely randomly.

Pair Corralation between NaturalShrimp and Adecoagro

Given the investment horizon of 90 days NaturalShrimp is expected to generate 7.4 times more return on investment than Adecoagro. However, NaturalShrimp is 7.4 times more volatile than Adecoagro SA. It trades about 0.1 of its potential returns per unit of risk. Adecoagro SA is currently generating about -0.03 per unit of risk. If you would invest  0.30  in NaturalShrimp on September 17, 2024 and sell it today you would earn a total of  0.10  from holding NaturalShrimp or generate 33.33% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.46%
Values	Daily Returns

NaturalShrimp  vs.  Adecoagro SA

NaturalShrimp

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in NaturalShrimp are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Even with relatively inconsistent primary indicators, NaturalShrimp reported solid returns over the last few months and may actually be approaching a breakup point.

Adecoagro SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Adecoagro SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Adecoagro is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with NaturalShrimp and Adecoagro

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

The idea behind NaturalShrimp and Adecoagro SA 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.