Correlation Between SentinelOne and BUA FOODS

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

By analyzing existing cross correlation between SentinelOne and BUA FOODS PLC, you can compare the effects of market volatilities on SentinelOne and BUA FOODS 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 SentinelOne with a short position of BUA FOODS. Check out your portfolio center. Please also check ongoing floating volatility patterns of SentinelOne and BUA FOODS.

Diversification Opportunities for SentinelOne and BUA FOODS

-0.57

Correlation Coefficient

SentinelOne  BUA FOODS

Excellent diversification

The 3 months correlation between SentinelOne and BUA is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding SentinelOne and BUA FOODS PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BUA FOODS PLC and SentinelOne 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 SentinelOne are associated (or correlated) with BUA FOODS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BUA FOODS PLC has no effect on the direction of SentinelOne i.e., SentinelOne and BUA FOODS go up and down completely randomly.

Pair Corralation between SentinelOne and BUA FOODS

Taking into account the 90-day investment horizon SentinelOne is expected to under-perform the BUA FOODS. But the stock apears to be less risky and, when comparing its historical volatility, SentinelOne is 1.03 times less risky than BUA FOODS. The stock trades about -0.02 of its potential returns per unit of risk. The BUA FOODS PLC is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest  39,490  in BUA FOODS PLC on October 23, 2024 and sell it today you would earn a total of  2,010  from holding BUA FOODS PLC or generate 5.09% return on investment over 90 days.

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

SentinelOne  vs.  BUA FOODS PLC

SentinelOne

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SentinelOne has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

BUA FOODS PLC

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in BUA FOODS PLC are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound fundamental indicators, BUA FOODS is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with SentinelOne and BUA FOODS

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

The idea behind SentinelOne and BUA FOODS 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.