Correlation Between BUA FOODS and SOVEREIGN TRUST
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By analyzing existing cross correlation between BUA FOODS PLC and SOVEREIGN TRUST INSURANCE, you can compare the effects of market volatilities on BUA FOODS and SOVEREIGN TRUST 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 BUA FOODS with a short position of SOVEREIGN TRUST. Check out your portfolio center. Please also check ongoing floating volatility patterns of BUA FOODS and SOVEREIGN TRUST.
Diversification Opportunities for BUA FOODS and SOVEREIGN TRUST
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between BUA and SOVEREIGN is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding BUA FOODS PLC and SOVEREIGN TRUST INSURANCE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SOVEREIGN TRUST INSURANCE and BUA FOODS 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 BUA FOODS PLC are associated (or correlated) with SOVEREIGN TRUST. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SOVEREIGN TRUST INSURANCE has no effect on the direction of BUA FOODS i.e., BUA FOODS and SOVEREIGN TRUST go up and down completely randomly.
Pair Corralation between BUA FOODS and SOVEREIGN TRUST
Assuming the 90 days trading horizon BUA FOODS is expected to generate 3.67 times less return on investment than SOVEREIGN TRUST. But when comparing it to its historical volatility, BUA FOODS PLC is 3.55 times less risky than SOVEREIGN TRUST. It trades about 0.12 of its potential returns per unit of risk. SOVEREIGN TRUST INSURANCE is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 97.00 in SOVEREIGN TRUST INSURANCE on April 2, 2025 and sell it today you would earn a total of 33.00 from holding SOVEREIGN TRUST INSURANCE or generate 34.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
BUA FOODS PLC vs. SOVEREIGN TRUST INSURANCE
Performance |
| Timeline |
| BUA FOODS PLC |
| SOVEREIGN TRUST INSURANCE |
BUA FOODS and SOVEREIGN TRUST Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BUA FOODS and SOVEREIGN TRUST
The main advantage of trading using opposite BUA FOODS and SOVEREIGN TRUST positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BUA FOODS position performs unexpectedly, SOVEREIGN TRUST 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 SOVEREIGN TRUST will offset losses from the drop in SOVEREIGN TRUST's long position.| BUA FOODS vs. GUINEA INSURANCE PLC | BUA FOODS vs. VITAFOAM NIGERIA PLC | BUA FOODS vs. SECURE ELECTRONIC TECHNOLOGY | BUA FOODS vs. UPDC PLC |
| SOVEREIGN TRUST vs. GUINEA INSURANCE PLC | SOVEREIGN TRUST vs. VITAFOAM NIGERIA PLC | SOVEREIGN TRUST vs. SECURE ELECTRONIC TECHNOLOGY | SOVEREIGN TRUST vs. UPDC PLC |
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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