Correlation Between FLJ and Bunzl Plc

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

By analyzing existing cross correlation between FLJ Group and Bunzl plc, you can compare the effects of market volatilities on FLJ and Bunzl 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 FLJ with a short position of Bunzl Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of FLJ and Bunzl Plc.

Diversification Opportunities for FLJ and Bunzl Plc

-0.48

Correlation Coefficient

FLJ  Bunzl Plc

Very good diversification

The 3 months correlation between FLJ and Bunzl is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding FLJ Group and Bunzl plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bunzl plc and FLJ 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 FLJ Group are associated (or correlated) with Bunzl Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bunzl plc has no effect on the direction of FLJ i.e., FLJ and Bunzl Plc go up and down completely randomly.

Pair Corralation between FLJ and Bunzl Plc

If you would invest  119.00  in FLJ Group on September 3, 2024 and sell it today you would earn a total of  0.00  from holding FLJ Group or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	1.56%
Values	Daily Returns

FLJ Group  vs.  Bunzl plc

FLJ Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days FLJ Group has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively steady essential indicators, FLJ is not utilizing all of its potentials. The latest stock price chaos, may contribute to medium-term losses for the stakeholders.

Bunzl plc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bunzl plc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong technical and fundamental indicators, Bunzl Plc is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with FLJ and Bunzl Plc

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

The idea behind FLJ Group and Bunzl 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.

Check out your portfolio center.

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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.