Correlation Between Bomesc Offshore and Great-Sun Foods

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

By analyzing existing cross correlation between Bomesc Offshore Engineering and Great Sun Foods Co, you can compare the effects of market volatilities on Bomesc Offshore and Great-Sun Foods 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 Bomesc Offshore with a short position of Great-Sun Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bomesc Offshore and Great-Sun Foods.

Diversification Opportunities for Bomesc Offshore and Great-Sun Foods

0.38

Correlation Coefficient

Bomesc Offshore  Great-Sun Foods

Weak diversification

The 3 months correlation between Bomesc and Great-Sun is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Bomesc Offshore Engineering and Great Sun Foods Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Great Sun Foods and Bomesc Offshore 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 Bomesc Offshore Engineering are associated (or correlated) with Great-Sun Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Great Sun Foods has no effect on the direction of Bomesc Offshore i.e., Bomesc Offshore and Great-Sun Foods go up and down completely randomly.

Pair Corralation between Bomesc Offshore and Great-Sun Foods

Assuming the 90 days trading horizon Bomesc Offshore is expected to generate 1.86 times less return on investment than Great-Sun Foods. But when comparing it to its historical volatility, Bomesc Offshore Engineering is 1.51 times less risky than Great-Sun Foods. It trades about 0.04 of its potential returns per unit of risk. Great Sun Foods Co is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  383.00  in Great Sun Foods Co on December 2, 2024 and sell it today you would earn a total of  108.00  from holding Great Sun Foods Co or generate 28.2% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Bomesc Offshore Engineering  vs.  Great Sun Foods Co

Bomesc Offshore Engi

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Bomesc Offshore Engineering are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Bomesc Offshore may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Great Sun Foods

Risk-Adjusted Performance

Very Weak

Over the last 90 days Great Sun Foods Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Great-Sun Foods is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Bomesc Offshore and Great-Sun Foods

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

The idea behind Bomesc Offshore Engineering and Great Sun Foods Co 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.