Correlation Between Bell Food and Associated British

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Can any of the company-specific risk be diversified away by investing in both Bell Food and Associated British 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 Bell Food and Associated British into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bell Food Group and Associated British Foods, you can compare the effects of market volatilities on Bell Food and Associated British 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 Bell Food with a short position of Associated British. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bell Food and Associated British.

Diversification Opportunities for Bell Food and Associated British

BellAssociatedDiversified AwayBellAssociatedDiversified Away100%
0.32
  Correlation Coefficient

Weak diversification

The 3 months correlation between Bell and Associated is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Bell Food Group and Associated British Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Associated British Foods and Bell Food 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 Bell Food Group are associated (or correlated) with Associated British. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Associated British Foods has no effect on the direction of Bell Food i.e., Bell Food and Associated British go up and down completely randomly.

Pair Corralation between Bell Food and Associated British

Assuming the 90 days trading horizon Bell Food Group is expected to generate 0.5 times more return on investment than Associated British. However, Bell Food Group is 1.98 times less risky than Associated British. It trades about 0.02 of its potential returns per unit of risk. Associated British Foods is currently generating about -0.13 per unit of risk. If you would invest  26,500  in Bell Food Group on September 26, 2024 and sell it today you would earn a total of  150.00  from holding Bell Food Group or generate 0.57% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy98.44%
ValuesDaily Returns

Bell Food Group  vs.  Associated British Foods

 Performance 
JavaScript chart by amCharts 3.21.15OctNovDec -8-6-4-2024
JavaScript chart by amCharts 3.21.150RFX ABF
       Timeline  
Bell Food Group 

Risk-Adjusted Performance

1 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Bell Food Group are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Bell Food is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.
JavaScript chart by amCharts 3.21.15OctNovDecNovDec260262264266268270
Associated British Foods 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Associated British Foods has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.
JavaScript chart by amCharts 3.21.15OctNovDecNovDec2,0502,1002,1502,2002,2502,3002,3502,400

Bell Food and Associated British Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-1.85-1.39-0.93-0.47-0.0310.390.851.311.772.23 0.20.40.60.81.01.2
JavaScript chart by amCharts 3.21.150RFX ABF
       Returns  

Pair Trading with Bell Food and Associated British

The main advantage of trading using opposite Bell Food and Associated British positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bell Food position performs unexpectedly, Associated British 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 Associated British will offset losses from the drop in Associated British's long position.
The idea behind Bell Food Group and Associated British 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.
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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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.

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