Correlation Between Bunge and Cresud SACIF
Can any of the company-specific risk be diversified away by investing in both Bunge and Cresud SACIF 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 Cresud SACIF into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bunge Limited and Cresud SACIF y, you can compare the effects of market volatilities on Bunge and Cresud SACIF 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 Cresud SACIF. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bunge and Cresud SACIF.
Diversification Opportunities for Bunge and Cresud SACIF
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Bunge and Cresud is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Bunge Limited and Cresud SACIF y in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cresud SACIF y 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 Cresud SACIF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cresud SACIF y has no effect on the direction of Bunge i.e., Bunge and Cresud SACIF go up and down completely randomly.
Pair Corralation between Bunge and Cresud SACIF
Allowing for the 90-day total investment horizon Bunge is expected to generate 1.59 times less return on investment than Cresud SACIF. But when comparing it to its historical volatility, Bunge Limited is 1.78 times less risky than Cresud SACIF. It trades about 0.18 of its potential returns per unit of risk. Cresud SACIF y is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 875.00 in Cresud SACIF y on January 25, 2024 and sell it today you would earn a total of 76.00 from holding Cresud SACIF y or generate 8.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Bunge Limited vs. Cresud SACIF y
Performance |
| Timeline |
| Bunge Limited |
| Cresud SACIF y |
Bunge and Cresud SACIF Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bunge and Cresud SACIF
The main advantage of trading using opposite Bunge and Cresud SACIF positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bunge position performs unexpectedly, Cresud SACIF 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 Cresud SACIF will offset losses from the drop in Cresud SACIF's long position.The idea behind Bunge Limited and Cresud SACIF y 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.| Cresud SACIF vs. Steel Partners Holdings | Cresud SACIF vs. Compass Diversified | Cresud SACIF vs. Brookfield Business Partners | Cresud SACIF vs. Matthews International |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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