Correlation Between Adecoagro and Local Bounti
Can any of the company-specific risk be diversified away by investing in both Adecoagro and Local Bounti 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 Adecoagro and Local Bounti into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Adecoagro SA and Local Bounti Corp, you can compare the effects of market volatilities on Adecoagro and Local Bounti 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 Adecoagro with a short position of Local Bounti. Check out your portfolio center. Please also check ongoing floating volatility patterns of Adecoagro and Local Bounti.
Diversification Opportunities for Adecoagro and Local Bounti
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Adecoagro and Local is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Adecoagro SA and Local Bounti Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Local Bounti Corp and Adecoagro 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 Adecoagro SA are associated (or correlated) with Local Bounti. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Local Bounti Corp has no effect on the direction of Adecoagro i.e., Adecoagro and Local Bounti go up and down completely randomly.
Pair Corralation between Adecoagro and Local Bounti
Given the investment horizon of 90 days Adecoagro SA is expected to generate 0.54 times more return on investment than Local Bounti. However, Adecoagro SA is 1.84 times less risky than Local Bounti. It trades about -0.08 of its potential returns per unit of risk. Local Bounti Corp is currently generating about -0.44 per unit of risk. If you would invest 1,150 in Adecoagro SA on August 24, 2024 and sell it today you would lose (43.00) from holding Adecoagro SA or give up 3.74% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Adecoagro SA vs. Local Bounti Corp
Performance |
| Timeline |
| Adecoagro SA |
| Local Bounti Corp |
Adecoagro and Local Bounti Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Adecoagro and Local Bounti
The main advantage of trading using opposite Adecoagro and Local Bounti positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Adecoagro position performs unexpectedly, Local Bounti 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 Local Bounti will offset losses from the drop in Local Bounti's long position.| Adecoagro vs. Limoneira Co | Adecoagro vs. Dole PLC | Adecoagro vs. Alico Inc | Adecoagro vs. Cal Maine Foods |
| Local Bounti vs. Fresh Del Monte | Local Bounti vs. Alico Inc | Local Bounti vs. SW Seed Company | Local Bounti vs. Adecoagro SA |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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