Correlation Between Simple Mart and Trade Van

Can any of the company-specific risk be diversified away by investing in both Simple Mart and Trade Van 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 Trade Van 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 Trade Van Information Services, you can compare the effects of market volatilities on Simple Mart and Trade Van 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 Trade Van. Check out your portfolio center. Please also check ongoing floating volatility patterns of Simple Mart and Trade Van.

Diversification Opportunities for Simple Mart and Trade Van

-0.07

Correlation Coefficient

Simple Mart  Trade Van

Good diversification

The 3 months correlation between Simple and Trade is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Simple Mart Retail and Trade Van Information Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Trade Van Information 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 Trade Van. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Trade Van Information has no effect on the direction of Simple Mart i.e., Simple Mart and Trade Van go up and down completely randomly.

Pair Corralation between Simple Mart and Trade Van

Assuming the 90 days trading horizon Simple Mart is expected to generate 5.62 times less return on investment than Trade Van. In addition to that, Simple Mart is 1.72 times more volatile than Trade Van Information Services. It trades about 0.01 of its total potential returns per unit of risk. Trade Van Information Services is currently generating about 0.1 per unit of volatility. If you would invest  5,890  in Trade Van Information Services on September 19, 2024 and sell it today you would earn a total of  2,470  from holding Trade Van Information Services or generate 41.94% return on investment over 90 days.

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

Simple Mart Retail  vs.  Trade Van Information Services

Simple Mart Retail

Risk-Adjusted Performance

0 of 100

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.

Trade Van Information

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Trade Van Information Services are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Trade Van may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Simple Mart and Trade Van

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

The idea behind Simple Mart Retail and Trade Van Information Services 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.