Correlation Between Archer Daniels and SW Seed

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

By analyzing existing cross correlation between Archer Daniels Midland and SW Seed Company, you can compare the effects of market volatilities on Archer Daniels and SW Seed 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 Archer Daniels with a short position of SW Seed. Check out your portfolio center. Please also check ongoing floating volatility patterns of Archer Daniels and SW Seed.

Diversification Opportunities for Archer Daniels and SW Seed

-0.85

Correlation Coefficient

Archer Daniels  SW Seed

Pay attention - limited upside

The 3 months correlation between Archer and SANW is -0.85. Overlapping area represents the amount of risk that can be diversified away by holding Archer Daniels Midland and SW Seed Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SW Seed Company and Archer Daniels 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 Archer Daniels Midland are associated (or correlated) with SW Seed. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SW Seed Company has no effect on the direction of Archer Daniels i.e., Archer Daniels and SW Seed go up and down completely randomly.

Pair Corralation between Archer Daniels and SW Seed

Considering the 90-day investment horizon Archer Daniels Midland is expected to generate 0.14 times more return on investment than SW Seed. However, Archer Daniels Midland is 6.94 times less risky than SW Seed. It trades about 0.13 of its potential returns per unit of risk. SW Seed Company is currently generating about -0.17 per unit of risk. If you would invest  4,783  in Archer Daniels Midland on May 6, 2025 and sell it today you would earn a total of  602.00  from holding Archer Daniels Midland or generate 12.59% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Archer Daniels Midland  vs.  SW Seed Company

Archer Daniels Midland

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Archer Daniels Midland are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very weak fundamental indicators, Archer Daniels displayed solid returns over the last few months and may actually be approaching a breakup point.

SW Seed Company

Risk-Adjusted Performance

Very Weak

Over the last 90 days SW Seed Company has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in September 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Archer Daniels and SW Seed

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

The idea behind Archer Daniels Midland and SW Seed Company 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.