Correlation Between Bon Natural and Wing Yip

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

Diversification Opportunities for Bon Natural and Wing Yip

-0.89

Correlation Coefficient

Bon Natural  Wing Yip

Pay attention - limited upside

The 3 months correlation between Bon and Wing is -0.89. Overlapping area represents the amount of risk that can be diversified away by holding Bon Natural Life and Wing Yip Food in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wing Yip Food 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 Wing Yip. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wing Yip Food has no effect on the direction of Bon Natural i.e., Bon Natural and Wing Yip go up and down completely randomly.

Pair Corralation between Bon Natural and Wing Yip

Considering the 90-day investment horizon Bon Natural is expected to generate 3.88 times less return on investment than Wing Yip. In addition to that, Bon Natural is 1.76 times more volatile than Wing Yip Food. It trades about 0.03 of its total potential returns per unit of risk. Wing Yip Food is currently generating about 0.19 per unit of volatility. If you would invest  440.00  in Wing Yip Food on December 16, 2024 and sell it today you would earn a total of  481.00  from holding Wing Yip Food or generate 109.32% return on investment over 90 days.

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

Bon Natural Life  vs.  Wing Yip Food

Bon Natural Life

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Bon Natural Life are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady basic indicators, Bon Natural displayed solid returns over the last few months and may actually be approaching a breakup point.

Wing Yip Food

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Wing Yip Food are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical indicators, Wing Yip reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Bon Natural and Wing Yip

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

The idea behind Bon Natural Life and Wing Yip Food 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.