Correlation Between BONAS IMPORT and Med Life

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

By analyzing existing cross correlation between BONAS IMPORT EXPORT and Med Life SA, you can compare the effects of market volatilities on BONAS IMPORT and Med Life 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 BONAS IMPORT with a short position of Med Life. Check out your portfolio center. Please also check ongoing floating volatility patterns of BONAS IMPORT and Med Life.

Diversification Opportunities for BONAS IMPORT and Med Life

0.38

Correlation Coefficient

BONAS IMPORT  Med Life

Weak diversification

The 3 months correlation between BONAS and Med is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding BONAS IMPORT EXPORT and Med Life SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Med Life SA and BONAS IMPORT 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 BONAS IMPORT EXPORT are associated (or correlated) with Med Life. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Med Life SA has no effect on the direction of BONAS IMPORT i.e., BONAS IMPORT and Med Life go up and down completely randomly.

Pair Corralation between BONAS IMPORT and Med Life

Assuming the 90 days trading horizon BONAS IMPORT EXPORT is expected to under-perform the Med Life. In addition to that, BONAS IMPORT is 1.3 times more volatile than Med Life SA. It trades about -0.35 of its total potential returns per unit of risk. Med Life SA is currently generating about 0.03 per unit of volatility. If you would invest  589.00  in Med Life SA on October 9, 2024 and sell it today you would earn a total of  5.00  from holding Med Life SA or generate 0.85% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	80.0%
Values	Daily Returns

BONAS IMPORT EXPORT  vs.  Med Life SA

BONAS IMPORT EXPORT

Risk-Adjusted Performance

0 of 100

Very Weak

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

Med Life SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Med Life SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Med Life is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with BONAS IMPORT and Med Life

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

The idea behind BONAS IMPORT EXPORT and Med Life SA 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.