Correlation Between ADF Foods and Seaboard

Can any of the company-specific risk be diversified away by investing in both ADF Foods and Seaboard 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 ADF Foods and Seaboard into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between ADF Foods Limited and Seaboard, you can compare the effects of market volatilities on ADF Foods and Seaboard 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 ADF Foods with a short position of Seaboard. Check out your portfolio center. Please also check ongoing floating volatility patterns of ADF Foods and Seaboard.

Diversification Opportunities for ADF Foods and Seaboard

0.74

Correlation Coefficient

ADF Foods  Seaboard

Poor diversification

The 3 months correlation between ADF and Seaboard is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding ADF Foods Limited and Seaboard in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Seaboard and ADF Foods 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 ADF Foods Limited are associated (or correlated) with Seaboard. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Seaboard has no effect on the direction of ADF Foods i.e., ADF Foods and Seaboard go up and down completely randomly.

Pair Corralation between ADF Foods and Seaboard

Assuming the 90 days trading horizon ADF Foods Limited is expected to generate 1.87 times more return on investment than Seaboard. However, ADF Foods is 1.87 times more volatile than Seaboard. It trades about 0.13 of its potential returns per unit of risk. Seaboard is currently generating about 0.2 per unit of risk. If you would invest  22,230  in ADF Foods Limited on April 25, 2025 and sell it today you would earn a total of  5,140  from holding ADF Foods Limited or generate 23.12% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	96.83%
Values	Daily Returns

ADF Foods Limited  vs.  Seaboard

ADF Foods Limited

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in ADF Foods Limited are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain basic indicators, ADF Foods exhibited solid returns over the last few months and may actually be approaching a breakup point.

Seaboard

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Seaboard are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating technical and fundamental indicators, Seaboard sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ADF Foods and Seaboard

The main advantage of trading using opposite ADF Foods and Seaboard positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ADF Foods position performs unexpectedly, Seaboard 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 Seaboard will offset losses from the drop in Seaboard's long position.

The idea behind ADF Foods Limited and Seaboard 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.

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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 Stocks Directory module to find actively traded stocks across global markets.