Correlation Between Bunge and Better Choice

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

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

Diversification Opportunities for Bunge and Better Choice

-0.45

Correlation Coefficient

Bunge  Better Choice

Very good diversification

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

Pair Corralation between Bunge and Better Choice

Allowing for the 90-day total investment horizon Bunge Limited is expected to generate 0.18 times more return on investment than Better Choice. However, Bunge Limited is 5.46 times less risky than Better Choice. It trades about -0.01 of its potential returns per unit of risk. Better Choice is currently generating about -0.01 per unit of risk. If you would invest  9,288  in Bunge Limited on September 28, 2024 and sell it today you would lose (1,482) from holding Bunge Limited or give up 15.96% of portfolio value over 90 days.

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

Bunge Limited  vs.  Better Choice

Bunge Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bunge Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's technical and fundamental indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Better Choice

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Better Choice are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady basic indicators, Better Choice reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Bunge and Better Choice

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

The idea behind Bunge Limited and Better Choice 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.