Correlation Between Edita Food and B Investments

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

By analyzing existing cross correlation between Edita Food Industries and B Investments Holding, you can compare the effects of market volatilities on Edita Food and B Investments 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 Edita Food with a short position of B Investments. Check out your portfolio center. Please also check ongoing floating volatility patterns of Edita Food and B Investments.

Diversification Opportunities for Edita Food and B Investments

0.38

Correlation Coefficient

Edita Food  B Investments

Weak diversification

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

Pair Corralation between Edita Food and B Investments

Assuming the 90 days trading horizon Edita Food Industries is expected to under-perform the B Investments. In addition to that, Edita Food is 1.01 times more volatile than B Investments Holding. It trades about -0.06 of its total potential returns per unit of risk. B Investments Holding is currently generating about 0.12 per unit of volatility. If you would invest  2,456  in B Investments Holding on September 18, 2024 and sell it today you would earn a total of  72.00  from holding B Investments Holding or generate 2.93% return on investment over 90 days.

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

Edita Food Industries  vs.  B Investments Holding

Edita Food Industries

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Edita Food Industries are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable technical and fundamental indicators, Edita Food is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

B Investments Holding

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in B Investments Holding are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, B Investments may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Edita Food and B Investments

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

The idea behind Edita Food Industries and B Investments Holding 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.