Correlation Between Bunge and Planet Green

Can any of the company-specific risk be diversified away by investing in both Bunge and Planet Green 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 Planet Green into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Bunge Limited and Planet Green Holdings, you can compare the effects of market volatilities on Bunge and Planet Green 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 Planet Green. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bunge and Planet Green.

Diversification Opportunities for Bunge and Planet Green

-0.6

Correlation Coefficient

Bunge  Planet Green

Excellent diversification

The 3 months correlation between Bunge and Planet is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Bunge Limited and Planet Green Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Planet Green Holdings 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 Planet Green. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Planet Green Holdings has no effect on the direction of Bunge i.e., Bunge and Planet Green go up and down completely randomly.

Pair Corralation between Bunge and Planet Green

Allowing for the 90-day total investment horizon Bunge Limited is expected to under-perform the Planet Green. But the stock apears to be less risky and, when comparing its historical volatility, Bunge Limited is 4.85 times less risky than Planet Green. The stock trades about -0.05 of its potential returns per unit of risk. The Planet Green Holdings is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  350.00  in Planet Green Holdings on September 14, 2024 and sell it today you would lose (87.86) from holding Planet Green Holdings or give up 25.1% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Bunge Limited  vs.  Planet Green Holdings

Bunge Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bunge Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's technical and fundamental indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Planet Green Holdings

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Planet Green Holdings are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Planet Green reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Bunge and Planet Green

The main advantage of trading using opposite Bunge and Planet Green positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bunge position performs unexpectedly, Planet Green 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 Planet Green will offset losses from the drop in Planet Green's long position.

The idea behind Bunge Limited and Planet Green Holdings 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.