Correlation Between Bonny Worldwide and Rafael Microelectronics

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

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

Diversification Opportunities for Bonny Worldwide and Rafael Microelectronics

-0.34

Correlation Coefficient

Bonny Worldwide  Rafael Microelectronics

Very good diversification

The 3 months correlation between Bonny and Rafael is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Bonny Worldwide and Rafael Microelectronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rafael Microelectronics and Bonny Worldwide 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 Bonny Worldwide are associated (or correlated) with Rafael Microelectronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rafael Microelectronics has no effect on the direction of Bonny Worldwide i.e., Bonny Worldwide and Rafael Microelectronics go up and down completely randomly.

Pair Corralation between Bonny Worldwide and Rafael Microelectronics

Assuming the 90 days trading horizon Bonny Worldwide is expected to under-perform the Rafael Microelectronics. In addition to that, Bonny Worldwide is 1.07 times more volatile than Rafael Microelectronics. It trades about -0.15 of its total potential returns per unit of risk. Rafael Microelectronics is currently generating about 0.05 per unit of volatility. If you would invest  12,150  in Rafael Microelectronics on December 23, 2024 and sell it today you would earn a total of  850.00  from holding Rafael Microelectronics or generate 7.0% return on investment over 90 days.

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

Bonny Worldwide  vs.  Rafael Microelectronics

Bonny Worldwide

Risk-Adjusted Performance

Very Weak

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

Rafael Microelectronics

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Rafael Microelectronics are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Rafael Microelectronics may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Bonny Worldwide and Rafael Microelectronics

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

The idea behind Bonny Worldwide and Rafael Microelectronics 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.