Correlation Between Vicat SA and Agrogeneration

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

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

Diversification Opportunities for Vicat SA and Agrogeneration

-0.51

Correlation Coefficient

Vicat SA  Agrogeneration

Excellent diversification

The 3 months correlation between Vicat and Agrogeneration is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Vicat SA and Agrogeneration in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Agrogeneration and Vicat SA 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 Vicat SA are associated (or correlated) with Agrogeneration. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Agrogeneration has no effect on the direction of Vicat SA i.e., Vicat SA and Agrogeneration go up and down completely randomly.

Pair Corralation between Vicat SA and Agrogeneration

Assuming the 90 days trading horizon Vicat SA is expected to generate 2.08 times less return on investment than Agrogeneration. But when comparing it to its historical volatility, Vicat SA is 4.09 times less risky than Agrogeneration. It trades about 0.07 of its potential returns per unit of risk. Agrogeneration is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  5.80  in Agrogeneration on September 25, 2024 and sell it today you would earn a total of  0.12  from holding Agrogeneration or generate 2.07% return on investment over 90 days.

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

Vicat SA  vs.  Agrogeneration

Vicat SA

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Vicat SA are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Vicat SA is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Agrogeneration

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Agrogeneration are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Agrogeneration reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Vicat SA and Agrogeneration

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

The idea behind Vicat SA and Agrogeneration 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.