Correlation Between Simple Mart and Tait Marketing

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

By analyzing existing cross correlation between Simple Mart Retail and Tait Marketing Distribution, you can compare the effects of market volatilities on Simple Mart and Tait Marketing 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 Simple Mart with a short position of Tait Marketing. Check out your portfolio center. Please also check ongoing floating volatility patterns of Simple Mart and Tait Marketing.

Diversification Opportunities for Simple Mart and Tait Marketing

0.23

Correlation Coefficient

Simple Mart  Tait Marketing

Modest diversification

The 3 months correlation between Simple and Tait is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Simple Mart Retail and Tait Marketing Distribution in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tait Marketing Distr and Simple Mart 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 Simple Mart Retail are associated (or correlated) with Tait Marketing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tait Marketing Distr has no effect on the direction of Simple Mart i.e., Simple Mart and Tait Marketing go up and down completely randomly.

Pair Corralation between Simple Mart and Tait Marketing

Assuming the 90 days trading horizon Simple Mart Retail is expected to under-perform the Tait Marketing. In addition to that, Simple Mart is 1.09 times more volatile than Tait Marketing Distribution. It trades about -0.01 of its total potential returns per unit of risk. Tait Marketing Distribution is currently generating about 0.22 per unit of volatility. If you would invest  4,000  in Tait Marketing Distribution on December 22, 2024 and sell it today you would earn a total of  490.00  from holding Tait Marketing Distribution or generate 12.25% return on investment over 90 days.

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

Simple Mart Retail  vs.  Tait Marketing Distribution

Simple Mart Retail

Risk-Adjusted Performance

Very Weak

Over the last 90 days Simple Mart Retail has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Simple Mart is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Tait Marketing Distr

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Tait Marketing Distribution are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Tait Marketing showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Simple Mart and Tait Marketing

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

The idea behind Simple Mart Retail and Tait Marketing Distribution 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.