Correlation Between Bank Central and HelloFresh

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

By analyzing existing cross correlation between Bank Central Asia and HelloFresh SE, you can compare the effects of market volatilities on Bank Central and HelloFresh 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 Bank Central with a short position of HelloFresh. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank Central and HelloFresh.

Diversification Opportunities for Bank Central and HelloFresh

-0.58

Correlation Coefficient

Bank Central  HelloFresh

Excellent diversification

The 3 months correlation between Bank and HelloFresh is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Bank Central Asia and HelloFresh SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HelloFresh SE and Bank Central 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 Bank Central Asia are associated (or correlated) with HelloFresh. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HelloFresh SE has no effect on the direction of Bank Central i.e., Bank Central and HelloFresh go up and down completely randomly.

Pair Corralation between Bank Central and HelloFresh

Assuming the 90 days horizon Bank Central is expected to generate 1.33 times less return on investment than HelloFresh. But when comparing it to its historical volatility, Bank Central Asia is 3.58 times less risky than HelloFresh. It trades about 0.0 of its potential returns per unit of risk. HelloFresh SE is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  1,950  in HelloFresh SE on October 3, 2024 and sell it today you would lose (761.00) from holding HelloFresh SE or give up 39.03% of portfolio value over 90 days.

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

Bank Central Asia  vs.  HelloFresh SE

Bank Central Asia

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bank Central Asia has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

HelloFresh SE

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in HelloFresh SE are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly inconsistent technical and fundamental indicators, HelloFresh reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Bank Central and HelloFresh

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

The idea behind Bank Central Asia and HelloFresh SE 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.