Correlation Between Bunge and China Jo

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Can any of the company-specific risk be diversified away by investing in both Bunge and China Jo 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 China Jo into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bunge Limited and China Jo Jo Drugstores, you can compare the effects of market volatilities on Bunge and China Jo 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 China Jo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bunge and China Jo.

Diversification Opportunities for Bunge and China Jo

-0.07
  Correlation Coefficient

Good diversification

The 3 months correlation between Bunge and China is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Bunge Limited and China Jo-Jo Drugstores in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Jo-Jo Drugstores 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 China Jo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Jo-Jo Drugstores has no effect on the direction of Bunge i.e., Bunge and China Jo go up and down completely randomly.

Pair Corralation between Bunge and China Jo

Allowing for the 90-day total investment horizon Bunge Limited is expected to generate 0.21 times more return on investment than China Jo. However, Bunge Limited is 4.79 times less risky than China Jo. It trades about 0.31 of its potential returns per unit of risk. China Jo Jo Drugstores is currently generating about -0.06 per unit of risk. If you would invest  9,374  in Bunge Limited on December 30, 2023 and sell it today you would earn a total of  878.00  from holding Bunge Limited or generate 9.37% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Bunge Limited  vs.  China Jo-Jo Drugstores

 Performance 
       Timeline  
Bunge Limited 

Risk-Adjusted Performance

2 of 100

 
Low
 
High
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Bunge Limited are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable technical and fundamental indicators, Bunge is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.
China Jo-Jo Drugstores 

Risk-Adjusted Performance

0 of 100

 
Low
 
High
Very Weak
Over the last 90 days China Jo Jo Drugstores has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's forward-looking indicators remain rather sound which may send shares a bit higher in April 2024. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Bunge and China Jo Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Bunge and China Jo

The main advantage of trading using opposite Bunge and China Jo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bunge position performs unexpectedly, China Jo 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 China Jo will offset losses from the drop in China Jo's long position.
The idea behind Bunge Limited and China Jo Jo Drugstores 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.

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