Correlation Between Bunge and AgriFORCE Growing
Can any of the company-specific risk be diversified away by investing in both Bunge and AgriFORCE Growing 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 Bunge and AgriFORCE Growing into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bunge Limited and AgriFORCE Growing Systems, you can compare the effects of market volatilities on Bunge and AgriFORCE Growing 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 Bunge with a short position of AgriFORCE Growing. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bunge and AgriFORCE Growing.
Diversification Opportunities for Bunge and AgriFORCE Growing
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Bunge and AgriFORCE is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Bunge Limited and AgriFORCE Growing Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AgriFORCE Growing Systems and Bunge 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 Bunge Limited are associated (or correlated) with AgriFORCE Growing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AgriFORCE Growing Systems has no effect on the direction of Bunge i.e., Bunge and AgriFORCE Growing go up and down completely randomly.
Pair Corralation between Bunge and AgriFORCE Growing
Allowing for the 90-day total investment horizon Bunge Limited is expected to generate 0.21 times more return on investment than AgriFORCE Growing. However, Bunge Limited is 4.71 times less risky than AgriFORCE Growing. It trades about -0.03 of its potential returns per unit of risk. AgriFORCE Growing Systems is currently generating about -0.1 per unit of risk. If you would invest 8,605 in Bunge Limited on November 5, 2024 and sell it today you would lose (1,089) from holding Bunge Limited or give up 12.66% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bunge Limited vs. AgriFORCE Growing Systems
Performance |
| Timeline |
| Bunge Limited |
| AgriFORCE Growing Systems |
Bunge and AgriFORCE Growing Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bunge and AgriFORCE Growing
The main advantage of trading using opposite Bunge and AgriFORCE Growing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bunge position performs unexpectedly, AgriFORCE Growing 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 AgriFORCE Growing will offset losses from the drop in AgriFORCE Growing's long position.The idea behind Bunge Limited and AgriFORCE Growing Systems 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.| AgriFORCE Growing vs. Limoneira Co | AgriFORCE Growing vs. Forafric Global PLC | AgriFORCE Growing vs. Australian Agricultural | AgriFORCE Growing vs. NaturalShrimp |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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