Correlation Between Card Factory and Betterware

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

By analyzing existing cross correlation between Card Factory plc and Betterware de Mxico,, you can compare the effects of market volatilities on Card Factory and Betterware 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 Card Factory with a short position of Betterware. Check out your portfolio center. Please also check ongoing floating volatility patterns of Card Factory and Betterware.

Diversification Opportunities for Card Factory and Betterware

-0.52

Correlation Coefficient

Card Factory  Betterware

Excellent diversification

The 3 months correlation between Card and Betterware is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Card Factory plc and Betterware de Mxico, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Betterware de Mxico, and Card Factory 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 Card Factory plc are associated (or correlated) with Betterware. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Betterware de Mxico, has no effect on the direction of Card Factory i.e., Card Factory and Betterware go up and down completely randomly.

Pair Corralation between Card Factory and Betterware

Assuming the 90 days horizon Card Factory plc is expected to under-perform the Betterware. In addition to that, Card Factory is 1.05 times more volatile than Betterware de Mxico,. It trades about -0.15 of its total potential returns per unit of risk. Betterware de Mxico, is currently generating about 0.11 per unit of volatility. If you would invest  988.00  in Betterware de Mxico, on December 30, 2024 and sell it today you would earn a total of  172.00  from holding Betterware de Mxico, or generate 17.41% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	96.88%
Values	Daily Returns

Card Factory plc  vs.  Betterware de Mxico,

Card Factory plc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Card Factory plc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent performance in the last few months, the Stock's fundamental indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Betterware de Mxico,

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Betterware de Mxico, are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak primary indicators, Betterware showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Card Factory and Betterware

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

The idea behind Card Factory plc and Betterware de Mxico, 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.