Correlation Between Limoneira and Golden Agri-Resources
Can any of the company-specific risk be diversified away by investing in both Limoneira and Golden Agri-Resources 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 Limoneira and Golden Agri-Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Limoneira Co and Golden Agri Resources, you can compare the effects of market volatilities on Limoneira and Golden Agri-Resources 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 Limoneira with a short position of Golden Agri-Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Limoneira and Golden Agri-Resources.
Diversification Opportunities for Limoneira and Golden Agri-Resources
-0.02 | Correlation Coefficient |
Good diversification
The 3 months correlation between Limoneira and Golden is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Limoneira Co and Golden Agri Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Golden Agri Resources and Limoneira 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 Limoneira Co are associated (or correlated) with Golden Agri-Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Golden Agri Resources has no effect on the direction of Limoneira i.e., Limoneira and Golden Agri-Resources go up and down completely randomly.
Pair Corralation between Limoneira and Golden Agri-Resources
Given the investment horizon of 90 days Limoneira is expected to generate 2.05 times less return on investment than Golden Agri-Resources. But when comparing it to its historical volatility, Limoneira Co is 2.94 times less risky than Golden Agri-Resources. It trades about 0.06 of its potential returns per unit of risk. Golden Agri Resources is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 19.00 in Golden Agri Resources on November 6, 2024 and sell it today you would earn a total of 4.00 from holding Golden Agri Resources or generate 21.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 64.91% |
| Values | Daily Returns |
Limoneira Co vs. Golden Agri Resources
Performance |
| Timeline |
| Limoneira |
| Golden Agri Resources |
Limoneira and Golden Agri-Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Limoneira and Golden Agri-Resources
The main advantage of trading using opposite Limoneira and Golden Agri-Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Limoneira position performs unexpectedly, Golden Agri-Resources 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 Golden Agri-Resources will offset losses from the drop in Golden Agri-Resources' long position.| Limoneira vs. Dole PLC | Limoneira vs. Alico Inc | Limoneira vs. Adecoagro SA | Limoneira vs. Cal Maine Foods |
| Golden Agri-Resources vs. Wilmar International | Golden Agri-Resources vs. SLC Agricola SA | Golden Agri-Resources vs. Brasilagro Adr | Golden Agri-Resources vs. Alico Inc |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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