Correlation Between BS Group and ForFarmers

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

By analyzing existing cross correlation between BS Group SA and ForFarmers NV, you can compare the effects of market volatilities on BS Group and ForFarmers 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 BS Group with a short position of ForFarmers. Check out your portfolio center. Please also check ongoing floating volatility patterns of BS Group and ForFarmers.

Diversification Opportunities for BS Group and ForFarmers

-0.22

Correlation Coefficient

BS Group  ForFarmers

Very good diversification

The 3 months correlation between BSGR and ForFarmers is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding BS Group SA and ForFarmers NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ForFarmers NV and BS Group 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 BS Group SA are associated (or correlated) with ForFarmers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ForFarmers NV has no effect on the direction of BS Group i.e., BS Group and ForFarmers go up and down completely randomly.

Pair Corralation between BS Group and ForFarmers

Assuming the 90 days trading horizon BS Group SA is expected to generate 0.19 times more return on investment than ForFarmers. However, BS Group SA is 5.4 times less risky than ForFarmers. It trades about 0.16 of its potential returns per unit of risk. ForFarmers NV is currently generating about -0.03 per unit of risk. If you would invest  576.00  in BS Group SA on April 22, 2025 and sell it today you would earn a total of  14.00  from holding BS Group SA or generate 2.43% return on investment over 90 days.

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

BS Group SA  vs.  ForFarmers NV

BS Group SA

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in BS Group SA are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, BS Group is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

ForFarmers NV

Risk-Adjusted Performance

Very Weak

Over the last 90 days ForFarmers NV has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, ForFarmers is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with BS Group and ForFarmers

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

The idea behind BS Group SA and ForFarmers NV 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.