Correlation Between Bon Natural and Smart For

Can any of the company-specific risk be diversified away by investing in both Bon Natural and Smart For 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 Smart For 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 Smart for Life,, you can compare the effects of market volatilities on Bon Natural and Smart For 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 Smart For. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bon Natural and Smart For.

Diversification Opportunities for Bon Natural and Smart For

0.49

Correlation Coefficient

Bon Natural  Smart For

Very weak diversification

The 3 months correlation between Bon and Smart is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Bon Natural Life and Smart for Life, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Smart for Life, 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 Smart For. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Smart for Life, has no effect on the direction of Bon Natural i.e., Bon Natural and Smart For go up and down completely randomly.

Pair Corralation between Bon Natural and Smart For

Considering the 90-day investment horizon Bon Natural Life is expected to generate 0.19 times more return on investment than Smart For. However, Bon Natural Life is 5.3 times less risky than Smart For. It trades about 0.01 of its potential returns per unit of risk. Smart for Life, is currently generating about -0.69 per unit of risk. If you would invest  162.00  in Bon Natural Life on September 12, 2024 and sell it today you would lose (6.00) from holding Bon Natural Life or give up 3.7% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	18.75%
Values	Daily Returns

Bon Natural Life  vs.  Smart for Life,

Bon Natural Life

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Bon Natural Life are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Bon Natural is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Smart for Life,

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Smart for Life, has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's technical and fundamental indicators remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Bon Natural and Smart For

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

The idea behind Bon Natural Life and Smart for Life, 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.