Correlation Between Forafric Global and Bunge

Can any of the company-specific risk be diversified away by investing in both Forafric Global and Bunge 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 Bunge 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 Bunge Limited, you can compare the effects of market volatilities on Forafric Global and Bunge 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 Bunge. Check out your portfolio center. Please also check ongoing floating volatility patterns of Forafric Global and Bunge.

Diversification Opportunities for Forafric Global and Bunge

0.45

Correlation Coefficient

Forafric Global  Bunge

Very weak diversification

The 3 months correlation between Forafric and Bunge is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Forafric Global PLC and Bunge Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bunge Limited 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 Bunge. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bunge Limited has no effect on the direction of Forafric Global i.e., Forafric Global and Bunge go up and down completely randomly.

Pair Corralation between Forafric Global and Bunge

Assuming the 90 days horizon Forafric Global PLC is expected to under-perform the Bunge. In addition to that, Forafric Global is 5.27 times more volatile than Bunge Limited. It trades about -0.09 of its total potential returns per unit of risk. Bunge Limited is currently generating about 0.01 per unit of volatility. If you would invest  7,615  in Bunge Limited on December 29, 2024 and sell it today you would earn a total of  35.00  from holding Bunge Limited or generate 0.46% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	90.16%
Values	Daily Returns

Forafric Global PLC  vs.  Bunge Limited

Forafric Global PLC

Risk-Adjusted Performance

Very Weak

Over the last 90 days Forafric Global PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's forward 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.

Bunge Limited

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Bunge Limited are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable technical and fundamental indicators, Bunge is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Forafric Global and Bunge

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

The idea behind Forafric Global PLC and Bunge Limited 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.