Correlation Between Agro Capital and NN
Can any of the company-specific risk be diversified away by investing in both Agro Capital and NN 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 Agro Capital and NN into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Agro Capital Management and NN Inc, you can compare the effects of market volatilities on Agro Capital and NN 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 Agro Capital with a short position of NN. Check out your portfolio center. Please also check ongoing floating volatility patterns of Agro Capital and NN.
Diversification Opportunities for Agro Capital and NN
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Agro and NN is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Agro Capital Management and NN Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NN Inc and Agro Capital 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 Agro Capital Management are associated (or correlated) with NN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NN Inc has no effect on the direction of Agro Capital i.e., Agro Capital and NN go up and down completely randomly.
Pair Corralation between Agro Capital and NN
Given the investment horizon of 90 days Agro Capital Management is expected to generate 5.86 times more return on investment than NN. However, Agro Capital is 5.86 times more volatile than NN Inc. It trades about 0.17 of its potential returns per unit of risk. NN Inc is currently generating about 0.03 per unit of risk. If you would invest 1.70 in Agro Capital Management on August 31, 2024 and sell it today you would earn a total of 0.53 from holding Agro Capital Management or generate 31.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Agro Capital Management vs. NN Inc
Performance |
| Timeline |
| Agro Capital Management |
| NN Inc |
Agro Capital and NN Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Agro Capital and NN
The main advantage of trading using opposite Agro Capital and NN positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Agro Capital position performs unexpectedly, NN 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 NN will offset losses from the drop in NN's long position.| Agro Capital vs. Sumitomo Corp ADR | Agro Capital vs. Itochu Corp ADR | Agro Capital vs. ITOCHU | Agro Capital vs. Marubeni Corp ADR |
| NN vs. Steel Partners Holdings | NN vs. Compass Diversified | NN vs. Brookfield Business Partners | NN vs. Matthews International |
Check out your portfolio center.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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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