Correlation Between Kroger and Standard Chartered

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

By analyzing existing cross correlation between Kroger Co and Standard Chartered PLC, you can compare the effects of market volatilities on Kroger and Standard Chartered 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 Kroger with a short position of Standard Chartered. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kroger and Standard Chartered.

Diversification Opportunities for Kroger and Standard Chartered

0.86

Correlation Coefficient

Kroger  Standard Chartered

Very poor diversification

The 3 months correlation between Kroger and Standard is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Kroger Co and Standard Chartered PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Standard Chartered PLC and Kroger 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 Kroger Co are associated (or correlated) with Standard Chartered. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Standard Chartered PLC has no effect on the direction of Kroger i.e., Kroger and Standard Chartered go up and down completely randomly.

Pair Corralation between Kroger and Standard Chartered

Assuming the 90 days trading horizon Kroger is expected to generate 2.02 times less return on investment than Standard Chartered. But when comparing it to its historical volatility, Kroger Co is 1.24 times less risky than Standard Chartered. It trades about 0.17 of its potential returns per unit of risk. Standard Chartered PLC is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest  76,340  in Standard Chartered PLC on September 13, 2024 and sell it today you would earn a total of  22,820  from holding Standard Chartered PLC or generate 29.89% return on investment over 90 days.

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

Kroger Co  vs.  Standard Chartered PLC

Kroger

Risk-Adjusted Performance

13 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Kroger Co are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Kroger unveiled solid returns over the last few months and may actually be approaching a breakup point.

Standard Chartered PLC

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Standard Chartered PLC are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Standard Chartered unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Kroger and Standard Chartered

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

The idea behind Kroger Co and Standard Chartered PLC 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.