Correlation Between China Green and Bioceres Crop
Can any of the company-specific risk be diversified away by investing in both China Green and Bioceres Crop 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 China Green and Bioceres Crop into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between China Green Agriculture and Bioceres Crop Solutions, you can compare the effects of market volatilities on China Green and Bioceres Crop 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 China Green with a short position of Bioceres Crop. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Green and Bioceres Crop.
Diversification Opportunities for China Green and Bioceres Crop
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between China and Bioceres is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding China Green Agriculture and Bioceres Crop Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bioceres Crop Solutions and China Green 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 China Green Agriculture are associated (or correlated) with Bioceres Crop. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bioceres Crop Solutions has no effect on the direction of China Green i.e., China Green and Bioceres Crop go up and down completely randomly.
Pair Corralation between China Green and Bioceres Crop
Considering the 90-day investment horizon China Green Agriculture is expected to generate 1.5 times more return on investment than Bioceres Crop. However, China Green is 1.5 times more volatile than Bioceres Crop Solutions. It trades about 0.06 of its potential returns per unit of risk. Bioceres Crop Solutions is currently generating about -0.08 per unit of risk. If you would invest 190.00 in China Green Agriculture on August 28, 2024 and sell it today you would earn a total of 8.00 from holding China Green Agriculture or generate 4.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
China Green Agriculture vs. Bioceres Crop Solutions
Performance |
| Timeline |
| China Green Agriculture |
| Bioceres Crop Solutions |
China Green and Bioceres Crop Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Green and Bioceres Crop
The main advantage of trading using opposite China Green and Bioceres Crop positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Green position performs unexpectedly, Bioceres Crop 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 Bioceres Crop will offset losses from the drop in Bioceres Crop's long position.The idea behind China Green Agriculture and Bioceres Crop Solutions 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.| Bioceres Crop vs. Intrepid Potash | Bioceres Crop vs. E I du | Bioceres Crop vs. FMC Corporation | Bioceres Crop vs. Benson Hill, Common |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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