Correlation Between Superior Plus and Relx PLC

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

By analyzing existing cross correlation between Superior Plus Corp and Relx PLC ADR, you can compare the effects of market volatilities on Superior Plus and Relx PLC 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 Superior Plus with a short position of Relx PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Superior Plus and Relx PLC.

Diversification Opportunities for Superior Plus and Relx PLC

0.27

Correlation Coefficient

Superior Plus  Relx PLC

Modest diversification

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

Pair Corralation between Superior Plus and Relx PLC

Assuming the 90 days horizon Superior Plus Corp is expected to under-perform the Relx PLC. In addition to that, Superior Plus is 1.8 times more volatile than Relx PLC ADR. It trades about -0.01 of its total potential returns per unit of risk. Relx PLC ADR is currently generating about 0.11 per unit of volatility. If you would invest  2,606  in Relx PLC ADR on October 25, 2024 and sell it today you would earn a total of  2,074  from holding Relx PLC ADR or generate 79.59% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	99.8%
Values	Daily Returns

Superior Plus Corp  vs.  Relx PLC ADR

Superior Plus Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Superior Plus Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Superior Plus is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Relx PLC ADR

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Relx PLC ADR are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain technical and fundamental indicators, Relx PLC may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Superior Plus and Relx PLC

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

The idea behind Superior Plus Corp and Relx PLC ADR 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.