Correlation Between SLC Agricola and Chaoda Modern
Can any of the company-specific risk be diversified away by investing in both SLC Agricola and Chaoda Modern 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 SLC Agricola and Chaoda Modern into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SLC Agricola SA and Chaoda Modern Agriculture, you can compare the effects of market volatilities on SLC Agricola and Chaoda Modern 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 SLC Agricola with a short position of Chaoda Modern. Check out your portfolio center. Please also check ongoing floating volatility patterns of SLC Agricola and Chaoda Modern.
Diversification Opportunities for SLC Agricola and Chaoda Modern
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between SLC and Chaoda is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding SLC Agricola SA and Chaoda Modern Agriculture in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chaoda Modern Agriculture and SLC Agricola 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 SLC Agricola SA are associated (or correlated) with Chaoda Modern. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chaoda Modern Agriculture has no effect on the direction of SLC Agricola i.e., SLC Agricola and Chaoda Modern go up and down completely randomly.
Pair Corralation between SLC Agricola and Chaoda Modern
Assuming the 90 days horizon SLC Agricola SA is expected to under-perform the Chaoda Modern. But the pink sheet apears to be less risky and, when comparing its historical volatility, SLC Agricola SA is 13.16 times less risky than Chaoda Modern. The pink sheet trades about -0.03 of its potential returns per unit of risk. The Chaoda Modern Agriculture is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 0.18 in Chaoda Modern Agriculture on August 27, 2024 and sell it today you would earn a total of 0.02 from holding Chaoda Modern Agriculture or generate 11.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.6% |
| Values | Daily Returns |
SLC Agricola SA vs. Chaoda Modern Agriculture
Performance |
| Timeline |
| SLC Agricola SA |
| Chaoda Modern Agriculture |
SLC Agricola and Chaoda Modern Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SLC Agricola and Chaoda Modern
The main advantage of trading using opposite SLC Agricola and Chaoda Modern positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SLC Agricola position performs unexpectedly, Chaoda Modern 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 Chaoda Modern will offset losses from the drop in Chaoda Modern's long position.| SLC Agricola vs. Golden Agri Resources | SLC Agricola vs. Wilmar International | SLC Agricola vs. Brasilagro Adr | SLC Agricola vs. Alico Inc |
| Chaoda Modern vs. SLC Agricola SA | Chaoda Modern vs. Adecoagro SA | Chaoda Modern vs. Limoneira Co | Chaoda Modern vs. Forafric Global PLC |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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