Correlation Between Bunge and Atlantic Sapphire
Can any of the company-specific risk be diversified away by investing in both Bunge and Atlantic Sapphire 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 Bunge and Atlantic Sapphire into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bunge Limited and Atlantic Sapphire ASA, you can compare the effects of market volatilities on Bunge and Atlantic Sapphire 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 Bunge with a short position of Atlantic Sapphire. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bunge and Atlantic Sapphire.
Diversification Opportunities for Bunge and Atlantic Sapphire
-0.28 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Bunge and Atlantic is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Bunge Limited and Atlantic Sapphire ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Atlantic Sapphire ASA and Bunge 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 Bunge Limited are associated (or correlated) with Atlantic Sapphire. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Atlantic Sapphire ASA has no effect on the direction of Bunge i.e., Bunge and Atlantic Sapphire go up and down completely randomly.
Pair Corralation between Bunge and Atlantic Sapphire
Allowing for the 90-day total investment horizon Bunge Limited is expected to under-perform the Atlantic Sapphire. But the stock apears to be less risky and, when comparing its historical volatility, Bunge Limited is 136.82 times less risky than Atlantic Sapphire. The stock trades about -0.07 of its potential returns per unit of risk. The Atlantic Sapphire ASA is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 200.00 in Atlantic Sapphire ASA on November 5, 2024 and sell it today you would lose (60.00) from holding Atlantic Sapphire ASA or give up 30.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.0% |
| Values | Daily Returns |
Bunge Limited vs. Atlantic Sapphire ASA
Performance |
| Timeline |
| Bunge Limited |
| Atlantic Sapphire ASA |
Bunge and Atlantic Sapphire Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bunge and Atlantic Sapphire
The main advantage of trading using opposite Bunge and Atlantic Sapphire positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bunge position performs unexpectedly, Atlantic Sapphire 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 Atlantic Sapphire will offset losses from the drop in Atlantic Sapphire's long position.The idea behind Bunge Limited and Atlantic Sapphire ASA 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.| Atlantic Sapphire vs. Forafric Global PLC | Atlantic Sapphire vs. Forafric Global PLC | Atlantic Sapphire vs. GrainCorp Limited | Atlantic Sapphire vs. Australian Agricultural |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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