Correlation Between BBB Foods and Green Oasis

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

By analyzing existing cross correlation between BBB Foods and Green Oasis Environmental, you can compare the effects of market volatilities on BBB Foods and Green Oasis 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 BBB Foods with a short position of Green Oasis. Check out your portfolio center. Please also check ongoing floating volatility patterns of BBB Foods and Green Oasis.

Diversification Opportunities for BBB Foods and Green Oasis

-0.36

Correlation Coefficient

BBB Foods  Green Oasis

Very good diversification

The 3 months correlation between BBB and Green is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding BBB Foods and Green Oasis Environmental in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Green Oasis Environmental and BBB Foods 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 BBB Foods are associated (or correlated) with Green Oasis. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Green Oasis Environmental has no effect on the direction of BBB Foods i.e., BBB Foods and Green Oasis go up and down completely randomly.

Pair Corralation between BBB Foods and Green Oasis

If you would invest  2,526  in BBB Foods on September 13, 2024 and sell it today you would earn a total of  400.00  from holding BBB Foods or generate 15.84% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

BBB Foods  vs.  Green Oasis Environmental

BBB Foods

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BBB Foods has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental drivers, BBB Foods is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Green Oasis Environmental

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Green Oasis Environmental has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Green Oasis is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with BBB Foods and Green Oasis

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

The idea behind BBB Foods and Green Oasis Environmental 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.