Correlation Between BBB Foods and Fenbo Holdings
Can any of the company-specific risk be diversified away by investing in both BBB Foods and Fenbo Holdings 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 Fenbo Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BBB Foods and Fenbo Holdings Limited, you can compare the effects of market volatilities on BBB Foods and Fenbo Holdings 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 Fenbo Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of BBB Foods and Fenbo Holdings.
Diversification Opportunities for BBB Foods and Fenbo Holdings
-0.53 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between BBB and Fenbo is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding BBB Foods and Fenbo Holdings Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fenbo Holdings 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 Fenbo Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fenbo Holdings has no effect on the direction of BBB Foods i.e., BBB Foods and Fenbo Holdings go up and down completely randomly.
Pair Corralation between BBB Foods and Fenbo Holdings
Given the investment horizon of 90 days BBB Foods is expected to generate 0.32 times more return on investment than Fenbo Holdings. However, BBB Foods is 3.12 times less risky than Fenbo Holdings. It trades about -0.16 of its potential returns per unit of risk. Fenbo Holdings Limited is currently generating about -0.21 per unit of risk. If you would invest 3,182 in BBB Foods on September 2, 2024 and sell it today you would lose (360.00) from holding BBB Foods or give up 11.31% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
BBB Foods vs. Fenbo Holdings Limited
Performance |
| Timeline |
| BBB Foods |
| Fenbo Holdings |
BBB Foods and Fenbo Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BBB Foods and Fenbo Holdings
The main advantage of trading using opposite BBB Foods and Fenbo Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BBB Foods position performs unexpectedly, Fenbo Holdings 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 Fenbo Holdings will offset losses from the drop in Fenbo Holdings' long position.The idea behind BBB Foods and Fenbo Holdings Limited 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.| Fenbo Holdings vs. National Beverage Corp | Fenbo Holdings vs. Montauk Renewables | Fenbo Holdings vs. Diageo PLC ADR | Fenbo Holdings vs. Transportadora de Gas |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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