Correlation Between Dis Chem and Trellidor Holdings

Can any of the company-specific risk be diversified away by investing in both Dis Chem and Trellidor Holdings 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 Dis Chem and Trellidor Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Dis Chem Pharmacies and Trellidor Holdings, you can compare the effects of market volatilities on Dis Chem and Trellidor Holdings 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 Dis Chem with a short position of Trellidor Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dis Chem and Trellidor Holdings.

Diversification Opportunities for Dis Chem and Trellidor Holdings

0.11

Correlation Coefficient

Dis Chem  Trellidor Holdings

Average diversification

The 3 months correlation between Dis and Trellidor is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Dis Chem Pharmacies and Trellidor Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Trellidor Holdings and Dis Chem 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 Dis Chem Pharmacies are associated (or correlated) with Trellidor Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Trellidor Holdings has no effect on the direction of Dis Chem i.e., Dis Chem and Trellidor Holdings go up and down completely randomly.

Pair Corralation between Dis Chem and Trellidor Holdings

Assuming the 90 days trading horizon Dis Chem Pharmacies is expected to under-perform the Trellidor Holdings. But the stock apears to be less risky and, when comparing its historical volatility, Dis Chem Pharmacies is 1.49 times less risky than Trellidor Holdings. The stock trades about -0.29 of its potential returns per unit of risk. The Trellidor Holdings is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  16,700  in Trellidor Holdings on October 4, 2024 and sell it today you would earn a total of  700.00  from holding Trellidor Holdings or generate 4.19% return on investment over 90 days.

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

Dis Chem Pharmacies  vs.  Trellidor Holdings

Dis Chem Pharmacies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Dis Chem Pharmacies has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Dis Chem is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Trellidor Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Trellidor Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in February 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Dis Chem and Trellidor Holdings

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

The idea behind Dis Chem Pharmacies and Trellidor Holdings 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..