Correlation Between Albion Technology and Bunzl PLC
Can any of the company-specific risk be diversified away by investing in both Albion Technology 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 Albion Technology and Bunzl PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Albion Technology General and Bunzl PLC, you can compare the effects of market volatilities on Albion Technology 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 Albion Technology with a short position of Bunzl PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Albion Technology and Bunzl PLC.
Diversification Opportunities for Albion Technology and Bunzl PLC
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Albion and Bunzl is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Albion Technology General and Bunzl PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bunzl PLC and Albion Technology 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 Albion Technology General 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 Albion Technology i.e., Albion Technology and Bunzl PLC go up and down completely randomly.
Pair Corralation between Albion Technology and Bunzl PLC
Assuming the 90 days trading horizon Albion Technology is expected to generate 3.66 times less return on investment than Bunzl PLC. But when comparing it to its historical volatility, Albion Technology General is 1.27 times less risky than Bunzl PLC. It trades about 0.04 of its potential returns per unit of risk. Bunzl PLC is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 295,273 in Bunzl PLC on September 1, 2024 and sell it today you would earn a total of 58,327 from holding Bunzl PLC or generate 19.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.23% |
| Values | Daily Returns |
Albion Technology General vs. Bunzl PLC
Performance |
| Timeline |
| Albion Technology General |
| Bunzl PLC |
Albion Technology and Bunzl PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Albion Technology and Bunzl PLC
The main advantage of trading using opposite Albion Technology and Bunzl PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Albion Technology 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.| Albion Technology vs. Samsung Electronics Co | Albion Technology vs. Samsung Electronics Co | Albion Technology vs. Toyota Motor Corp | Albion Technology vs. Reliance Industries Ltd |
| Bunzl PLC vs. Samsung Electronics Co | Bunzl PLC vs. Samsung Electronics Co | Bunzl PLC vs. Hyundai Motor | Bunzl PLC vs. Toyota Motor Corp |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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