Correlation Between Bon Natural and Grand Havana

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

By analyzing existing cross correlation between Bon Natural Life and Grand Havana, you can compare the effects of market volatilities on Bon Natural and Grand Havana 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 Bon Natural with a short position of Grand Havana. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bon Natural and Grand Havana.

Diversification Opportunities for Bon Natural and Grand Havana

0.14

Correlation Coefficient

Bon Natural  Grand Havana

Average diversification

The 3 months correlation between Bon and Grand is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Bon Natural Life and Grand Havana in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grand Havana and Bon Natural 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 Bon Natural Life are associated (or correlated) with Grand Havana. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grand Havana has no effect on the direction of Bon Natural i.e., Bon Natural and Grand Havana go up and down completely randomly.

Pair Corralation between Bon Natural and Grand Havana

Considering the 90-day investment horizon Bon Natural Life is expected to under-perform the Grand Havana. In addition to that, Bon Natural is 1.69 times more volatile than Grand Havana. It trades about -0.14 of its total potential returns per unit of risk. Grand Havana is currently generating about 0.01 per unit of volatility. If you would invest  0.06  in Grand Havana on December 26, 2024 and sell it today you would lose (0.01) from holding Grand Havana or give up 16.67% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.36%
Values	Daily Returns

Bon Natural Life  vs.  Grand Havana

Bon Natural Life

Risk-Adjusted Performance

Very Weak

Over the last 90 days Bon Natural Life has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Grand Havana

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Grand Havana are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, Grand Havana may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Bon Natural and Grand Havana

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

The idea behind Bon Natural Life and Grand Havana 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.