Correlation Between Forafric Global and Alico

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

By analyzing existing cross correlation between Forafric Global PLC and Alico Inc, you can compare the effects of market volatilities on Forafric Global and Alico 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 Forafric Global with a short position of Alico. Check out your portfolio center. Please also check ongoing floating volatility patterns of Forafric Global and Alico.

Diversification Opportunities for Forafric Global and Alico

-0.39

Correlation Coefficient

Forafric Global  Alico

Very good diversification

The 3 months correlation between Forafric and Alico is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Forafric Global PLC and Alico Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alico Inc and Forafric Global 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 Forafric Global PLC are associated (or correlated) with Alico. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alico Inc has no effect on the direction of Forafric Global i.e., Forafric Global and Alico go up and down completely randomly.

Pair Corralation between Forafric Global and Alico

Given the investment horizon of 90 days Forafric Global PLC is expected to generate 1.4 times more return on investment than Alico. However, Forafric Global is 1.4 times more volatile than Alico Inc. It trades about 0.02 of its potential returns per unit of risk. Alico Inc is currently generating about -0.03 per unit of risk. If you would invest  995.00  in Forafric Global PLC on February 23, 2024 and sell it today you would earn a total of  81.00  from holding Forafric Global PLC or generate 8.14% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.8%
Values	Daily Returns

Forafric Global PLC  vs.  Alico Inc

Forafric Global PLC

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Forafric Global PLC are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong basic indicators, Forafric Global is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Alico Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Alico Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy fundamental indicators, Alico is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Forafric Global and Alico

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

The idea behind Forafric Global PLC and Alico Inc 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.