Correlation Between Simple Mart and Provision Information

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

Diversification Opportunities for Simple Mart and Provision Information

-0.79

Correlation Coefficient

Simple Mart  Provision Information

Pay attention - limited upside

The 3 months correlation between Simple and Provision is -0.79. Overlapping area represents the amount of risk that can be diversified away by holding Simple Mart Retail and Provision Information CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Provision 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 Provision Information. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Provision Information has no effect on the direction of Simple Mart i.e., Simple Mart and Provision Information go up and down completely randomly.

Pair Corralation between Simple Mart and Provision Information

Assuming the 90 days trading horizon Simple Mart Retail is expected to under-perform the Provision Information. But the stock apears to be less risky and, when comparing its historical volatility, Simple Mart Retail is 1.0 times less risky than Provision Information. The stock trades about -0.38 of its potential returns per unit of risk. The Provision Information CoLtd is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  7,450  in Provision Information CoLtd on October 12, 2024 and sell it today you would earn a total of  170.00  from holding Provision Information CoLtd or generate 2.28% return on investment over 90 days.

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

Simple Mart Retail  vs.  Provision Information CoLtd

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 latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Provision Information

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Provision Information CoLtd are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Provision Information may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Simple Mart and Provision Information

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

The idea behind Simple Mart Retail and Provision Information CoLtd 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.