Correlation Between Pond Technologies and Bunge

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

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

Diversification Opportunities for Pond Technologies and Bunge

-0.24

Correlation Coefficient

Pond Technologies  Bunge

Very good diversification

The 3 months correlation between Pond and Bunge is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Pond Technologies Holdings and Bunge Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bunge Limited and Pond Technologies 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 Pond Technologies Holdings are associated (or correlated) with Bunge. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bunge Limited has no effect on the direction of Pond Technologies i.e., Pond Technologies and Bunge go up and down completely randomly.

Pair Corralation between Pond Technologies and Bunge

Assuming the 90 days horizon Pond Technologies Holdings is expected to generate 14.16 times more return on investment than Bunge. However, Pond Technologies is 14.16 times more volatile than Bunge Limited. It trades about 0.12 of its potential returns per unit of risk. Bunge Limited is currently generating about -0.15 per unit of risk. If you would invest  1.02  in Pond Technologies Holdings on September 15, 2024 and sell it today you would earn a total of  0.59  from holding Pond Technologies Holdings or generate 57.84% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	96.97%
Values	Daily Returns

Pond Technologies Holdings  vs.  Bunge Limited

Pond Technologies

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Pond Technologies Holdings are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak technical indicators, Pond Technologies reported solid returns over the last few months and may actually be approaching a breakup point.

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.

Pair Trading with Pond Technologies and Bunge

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

The idea behind Pond Technologies Holdings and Bunge 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.

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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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.