Correlation Between Bunge and Hain Celestial

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

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

Diversification Opportunities for Bunge and Hain Celestial

-0.95

Correlation Coefficient

Bunge  Hain Celestial

Pay attention - limited upside

The 3 months correlation between Bunge and Hain is -0.95. Overlapping area represents the amount of risk that can be diversified away by holding Bunge Limited and The Hain Celestial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hain Celestial 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 Hain Celestial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hain Celestial has no effect on the direction of Bunge i.e., Bunge and Hain Celestial go up and down completely randomly.

Pair Corralation between Bunge and Hain Celestial

Allowing for the 90-day total investment horizon Bunge Limited is expected to generate 0.48 times more return on investment than Hain Celestial. However, Bunge Limited is 2.07 times less risky than Hain Celestial. It trades about 0.05 of its potential returns per unit of risk. The Hain Celestial is currently generating about -0.13 per unit of risk. If you would invest  8,841  in Bunge Limited on January 28, 2024 and sell it today you would earn a total of  1,432  from holding Bunge Limited or generate 16.2% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	99.6%
Values	Daily Returns

Bunge Limited  vs.  The Hain Celestial

Bunge Limited

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Bunge Limited are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating technical and fundamental indicators, Bunge reported solid returns over the last few months and may actually be approaching a breakup point.

Hain Celestial

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days The Hain Celestial has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's forward indicators remain very healthy which may send shares a bit higher in May 2024. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Bunge and Hain Celestial

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

The idea behind Bunge Limited and The Hain Celestial 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 Transaction History module to view history of all your transactions and understand their impact on performance.