Correlation Between Bunge and Steakholder Foods
Can any of the company-specific risk be diversified away by investing in both Bunge and Steakholder Foods 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 Steakholder Foods into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bunge Limited and Steakholder Foods, you can compare the effects of market volatilities on Bunge and Steakholder Foods 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 Steakholder Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bunge and Steakholder Foods.
Diversification Opportunities for Bunge and Steakholder Foods
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Bunge and Steakholder is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Bunge Limited and Steakholder Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Steakholder Foods 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 Steakholder Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Steakholder Foods has no effect on the direction of Bunge i.e., Bunge and Steakholder Foods go up and down completely randomly.
Pair Corralation between Bunge and Steakholder Foods
Allowing for the 90-day total investment horizon Bunge Limited is expected to generate 0.56 times more return on investment than Steakholder Foods. However, Bunge Limited is 1.78 times less risky than Steakholder Foods. It trades about 0.01 of its potential returns per unit of risk. Steakholder Foods is currently generating about -0.16 per unit of risk. If you would invest 7,757 in Bunge Limited on November 2, 2024 and sell it today you would earn a total of 8.00 from holding Bunge Limited or generate 0.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bunge Limited vs. Steakholder Foods
Performance |
| Timeline |
| Bunge Limited |
| Steakholder Foods |
Bunge and Steakholder Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bunge and Steakholder Foods
The main advantage of trading using opposite Bunge and Steakholder Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bunge position performs unexpectedly, Steakholder Foods 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 Steakholder Foods will offset losses from the drop in Steakholder Foods' long position.The idea behind Bunge Limited and Steakholder Foods 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.| Steakholder Foods vs. Farmmi Inc | Steakholder Foods vs. Herbalife Nutrition | Steakholder Foods vs. Beyond Meat | Steakholder Foods vs. Bit Origin |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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