Correlation Between Limoneira and Astra Agro

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

By analyzing existing cross correlation between Limoneira Co and Astra Agro Lestari, you can compare the effects of market volatilities on Limoneira and Astra Agro 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 Astra Agro. Check out your portfolio center. Please also check ongoing floating volatility patterns of Limoneira and Astra Agro.

Diversification Opportunities for Limoneira and Astra Agro

0.29

Correlation Coefficient

Limoneira  Astra Agro

Modest diversification

The 3 months correlation between Limoneira and Astra is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Limoneira Co and Astra Agro Lestari in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Astra Agro Lestari 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 Astra Agro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Astra Agro Lestari has no effect on the direction of Limoneira i.e., Limoneira and Astra Agro go up and down completely randomly.

Pair Corralation between Limoneira and Astra Agro

If you would invest  2,603  in Limoneira Co on September 15, 2024 and sell it today you would earn a total of  99.00  from holding Limoneira Co or generate 3.8% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	4.76%
Values	Daily Returns

Limoneira Co  vs.  Astra Agro Lestari

Limoneira

Risk-Adjusted Performance

3 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Limoneira Co are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Limoneira is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Astra Agro Lestari

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Astra Agro Lestari has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Astra Agro is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Limoneira and Astra Agro

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

The idea behind Limoneira Co and Astra Agro Lestari 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.

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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.