Correlation Between ATRESMEDIA and Bunzl PLC

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

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

Diversification Opportunities for ATRESMEDIA and Bunzl PLC

-0.76

Correlation Coefficient

ATRESMEDIA  Bunzl PLC

Pay attention - limited upside

The 3 months correlation between ATRESMEDIA and Bunzl is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding ATRESMEDIA and Bunzl PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bunzl PLC and ATRESMEDIA 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 ATRESMEDIA 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 ATRESMEDIA i.e., ATRESMEDIA and Bunzl PLC go up and down completely randomly.

Pair Corralation between ATRESMEDIA and Bunzl PLC

Assuming the 90 days trading horizon ATRESMEDIA is expected to generate 0.83 times more return on investment than Bunzl PLC. However, ATRESMEDIA is 1.2 times less risky than Bunzl PLC. It trades about 0.24 of its potential returns per unit of risk. Bunzl PLC is currently generating about -0.09 per unit of risk. If you would invest  419.00  in ATRESMEDIA on December 25, 2024 and sell it today you would earn a total of  102.00  from holding ATRESMEDIA or generate 24.34% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.36%
Values	Daily Returns

ATRESMEDIA  vs.  Bunzl PLC

ATRESMEDIA

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in ATRESMEDIA are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile technical and fundamental indicators, ATRESMEDIA exhibited solid returns over the last few months and may actually be approaching a breakup point.

Bunzl PLC

Risk-Adjusted Performance

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 latest fragile 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.

Pair Trading with ATRESMEDIA and Bunzl PLC

The main advantage of trading using opposite ATRESMEDIA and Bunzl PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ATRESMEDIA 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 ATRESMEDIA 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.

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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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.