Correlation Between Stef SA and Bonduelle SCA

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

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

Diversification Opportunities for Stef SA and Bonduelle SCA

-0.53

Correlation Coefficient

Stef SA  Bonduelle SCA

Excellent diversification

The 3 months correlation between Stef and Bonduelle is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Stef SA and Bonduelle SCA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bonduelle SCA and Stef SA 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 Stef 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 Stef SA i.e., Stef SA and Bonduelle SCA go up and down completely randomly.

Pair Corralation between Stef SA and Bonduelle SCA

Assuming the 90 days trading horizon Stef SA is expected to under-perform the Bonduelle SCA. But the stock apears to be less risky and, when comparing its historical volatility, Stef SA is 1.6 times less risky than Bonduelle SCA. The stock trades about -0.06 of its potential returns per unit of risk. The 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 Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Stef SA  vs.  Bonduelle SCA

Stef SA

Risk-Adjusted Performance

Very Weak

Over the last 90 days Stef SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong technical and fundamental indicators, Stef SA 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 Stef SA and Bonduelle SCA

The main advantage of trading using opposite Stef SA and Bonduelle SCA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Stef SA 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 Stef 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.