Correlation Between Poly Real and Springsnow Food

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

By analyzing existing cross correlation between Poly Real Estate and Springsnow Food Group, you can compare the effects of market volatilities on Poly Real and Springsnow Food 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 Poly Real with a short position of Springsnow Food. Check out your portfolio center. Please also check ongoing floating volatility patterns of Poly Real and Springsnow Food.

Diversification Opportunities for Poly Real and Springsnow Food

-0.27

Correlation Coefficient

Poly Real  Springsnow Food

Very good diversification

The 3 months correlation between Poly and Springsnow is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Poly Real Estate and Springsnow Food Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Springsnow Food Group and Poly Real 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 Poly Real Estate are associated (or correlated) with Springsnow Food. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Springsnow Food Group has no effect on the direction of Poly Real i.e., Poly Real and Springsnow Food go up and down completely randomly.

Pair Corralation between Poly Real and Springsnow Food

Assuming the 90 days trading horizon Poly Real Estate is expected to under-perform the Springsnow Food. But the stock apears to be less risky and, when comparing its historical volatility, Poly Real Estate is 1.13 times less risky than Springsnow Food. The stock trades about -0.14 of its potential returns per unit of risk. The Springsnow Food Group is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest  925.00  in Springsnow Food Group on October 6, 2024 and sell it today you would lose (78.00) from holding Springsnow Food Group or give up 8.43% of portfolio value over 90 days.

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

Poly Real Estate  vs.  Springsnow Food Group

Poly Real Estate

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Poly Real Estate has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Springsnow Food Group

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Poly Real and Springsnow Food

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

The idea behind Poly Real Estate and Springsnow Food Group 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.