Correlation Between BUA FOODS and CHELLARAMS PLC

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

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

Diversification Opportunities for BUA FOODS and CHELLARAMS PLC

0.0

Correlation Coefficient

BUA FOODS  CHELLARAMS PLC

Pay attention - limited upside

The 3 months correlation between BUA and CHELLARAMS is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding BUA FOODS PLC and CHELLARAMS PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CHELLARAMS PLC and BUA FOODS 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 BUA FOODS PLC are associated (or correlated) with CHELLARAMS PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CHELLARAMS PLC has no effect on the direction of BUA FOODS i.e., BUA FOODS and CHELLARAMS PLC go up and down completely randomly.

Pair Corralation between BUA FOODS and CHELLARAMS PLC

Assuming the 90 days trading horizon BUA FOODS PLC is expected to generate 0.57 times more return on investment than CHELLARAMS PLC. However, BUA FOODS PLC is 1.77 times less risky than CHELLARAMS PLC. It trades about 0.24 of its potential returns per unit of risk. CHELLARAMS PLC is currently generating about 0.08 per unit of risk. If you would invest  7,450  in BUA FOODS PLC on October 21, 2024 and sell it today you would earn a total of  34,050  from holding BUA FOODS PLC or generate 457.05% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	80.94%
Values	Daily Returns

BUA FOODS PLC  vs.  CHELLARAMS PLC

BUA FOODS PLC

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in BUA FOODS PLC are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound fundamental indicators, BUA FOODS is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

CHELLARAMS PLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CHELLARAMS PLC has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, CHELLARAMS PLC is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with BUA FOODS and CHELLARAMS PLC

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

The idea behind BUA FOODS PLC and CHELLARAMS PLC 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.