Correlation Between Golden Agri and Limoneira
Can any of the company-specific risk be diversified away by investing in both Golden Agri and Limoneira 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 Golden Agri and Limoneira into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Golden Agri Resources and Limoneira Co, you can compare the effects of market volatilities on Golden Agri and Limoneira 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 Golden Agri with a short position of Limoneira. Check out your portfolio center. Please also check ongoing floating volatility patterns of Golden Agri and Limoneira.
Diversification Opportunities for Golden Agri and Limoneira
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Golden and Limoneira is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Golden Agri Resources and Limoneira Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Limoneira and Golden Agri 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 Golden Agri Resources are associated (or correlated) with Limoneira. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Limoneira has no effect on the direction of Golden Agri i.e., Golden Agri and Limoneira go up and down completely randomly.
Pair Corralation between Golden Agri and Limoneira
Assuming the 90 days horizon Golden Agri Resources is expected to under-perform the Limoneira. But the pink sheet apears to be less risky and, when comparing its historical volatility, Golden Agri Resources is 1.85 times less risky than Limoneira. The pink sheet trades about -0.32 of its potential returns per unit of risk. The Limoneira Co is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 2,633 in Limoneira Co on August 28, 2024 and sell it today you would earn a total of 100.00 from holding Limoneira Co or generate 3.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Golden Agri Resources vs. Limoneira Co
Performance |
| Timeline |
| Golden Agri Resources |
| Limoneira |
Golden Agri and Limoneira Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Golden Agri and Limoneira
The main advantage of trading using opposite Golden Agri and Limoneira positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Golden Agri position performs unexpectedly, Limoneira 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 Limoneira will offset losses from the drop in Limoneira's long position.| Golden Agri vs. Avi Ltd ADR | Golden Agri vs. Altavoz Entertainment | Golden Agri vs. Aryzta AG PK | Golden Agri vs. Artisan Consumer Goods |
| Limoneira vs. Lancaster Colony | Limoneira vs. Treehouse Foods | Limoneira vs. John B Sanfilippo | Limoneira vs. Seneca Foods Corp |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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