Correlation Between Associated British and Calbee

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

By analyzing existing cross correlation between Associated British Foods and Calbee Inc, you can compare the effects of market volatilities on Associated British and Calbee 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 Associated British with a short position of Calbee. Check out your portfolio center. Please also check ongoing floating volatility patterns of Associated British and Calbee.

Diversification Opportunities for Associated British and Calbee

0.59

Correlation Coefficient

Associated British  Calbee

Very weak diversification

The 3 months correlation between Associated and Calbee is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Associated British Foods and Calbee Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Calbee Inc and Associated British 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 Associated British Foods are associated (or correlated) with Calbee. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Calbee Inc has no effect on the direction of Associated British i.e., Associated British and Calbee go up and down completely randomly.

Pair Corralation between Associated British and Calbee

Assuming the 90 days horizon Associated British Foods is expected to generate 0.74 times more return on investment than Calbee. However, Associated British Foods is 1.34 times less risky than Calbee. It trades about 0.13 of its potential returns per unit of risk. Calbee Inc is currently generating about 0.04 per unit of risk. If you would invest  2,288  in Associated British Foods on February 3, 2025 and sell it today you would earn a total of  462.00  from holding Associated British Foods or generate 20.19% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Associated British Foods  vs.  Calbee Inc

Associated British Foods

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Associated British Foods are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain technical and fundamental indicators, Associated British showed solid returns over the last few months and may actually be approaching a breakup point.

Calbee Inc

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Calbee Inc are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak technical and fundamental indicators, Calbee may actually be approaching a critical reversion point that can send shares even higher in June 2025.

Pair Trading with Associated British and Calbee

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

The idea behind Associated British Foods and Calbee Inc 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.

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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.