Correlation Between JC Decaux and Bonduelle SCA

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

By analyzing existing cross correlation between JC Decaux SA and Bonduelle SCA, you can compare the effects of market volatilities on JC Decaux and Bonduelle SCA 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 JC Decaux with a short position of Bonduelle SCA. Check out your portfolio center. Please also check ongoing floating volatility patterns of JC Decaux and Bonduelle SCA.

Diversification Opportunities for JC Decaux and Bonduelle SCA

0.44

Correlation Coefficient

JC Decaux  Bonduelle SCA

Very weak diversification

The 3 months correlation between DEC and Bonduelle is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding JC Decaux SA and Bonduelle SCA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bonduelle SCA and JC Decaux 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 JC Decaux SA are associated (or correlated) with Bonduelle SCA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bonduelle SCA has no effect on the direction of JC Decaux i.e., JC Decaux and Bonduelle SCA go up and down completely randomly.

Pair Corralation between JC Decaux and Bonduelle SCA

Assuming the 90 days trading horizon JC Decaux is expected to generate 3.8 times less return on investment than Bonduelle SCA. But when comparing it to its historical volatility, JC Decaux SA is 1.03 times less risky than Bonduelle SCA. It trades about 0.04 of its potential returns per unit of risk. Bonduelle SCA is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  621.00  in Bonduelle SCA on December 30, 2024 and sell it today you would earn a total of  153.00  from holding Bonduelle SCA or generate 24.64% return on investment over 90 days.

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

JC Decaux SA  vs.  Bonduelle SCA

JC Decaux SA

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in JC Decaux SA are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong fundamental indicators, JC Decaux is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Bonduelle SCA

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Bonduelle SCA are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Bonduelle SCA sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with JC Decaux and Bonduelle SCA

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

The idea behind JC Decaux SA and Bonduelle SCA 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.