Correlation Between BUA FOODS and STANDARD ALLIANCE

Can any of the company-specific risk be diversified away by investing in both BUA FOODS and STANDARD ALLIANCE 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 STANDARD ALLIANCE 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 STANDARD ALLIANCE INSURANCE, you can compare the effects of market volatilities on BUA FOODS and STANDARD ALLIANCE 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 STANDARD ALLIANCE. Check out your portfolio center. Please also check ongoing floating volatility patterns of BUA FOODS and STANDARD ALLIANCE.

Diversification Opportunities for BUA FOODS and STANDARD ALLIANCE

0.0

Correlation Coefficient

BUA FOODS  STANDARD ALLIANCE

Pay attention - limited upside

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

Pair Corralation between BUA FOODS and STANDARD ALLIANCE

If you would invest  39,490  in BUA FOODS PLC on October 10, 2024 and sell it today you would earn a total of  2,010  from holding BUA FOODS PLC or generate 5.09% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

BUA FOODS PLC  vs.  STANDARD ALLIANCE INSURANCE

BUA FOODS PLC

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in BUA FOODS PLC are ranked lower than 10 (%) 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.

STANDARD ALLIANCE

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days STANDARD ALLIANCE INSURANCE has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, STANDARD ALLIANCE is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with BUA FOODS and STANDARD ALLIANCE

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

The idea behind BUA FOODS PLC and STANDARD ALLIANCE INSURANCE 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.