Correlation Between Exchange Income and Rogers Sugar

Can any of the company-specific risk be diversified away by investing in both Exchange Income and Rogers Sugar 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 Exchange Income and Rogers Sugar into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Exchange Income and Rogers Sugar, you can compare the effects of market volatilities on Exchange Income and Rogers Sugar 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 Exchange Income with a short position of Rogers Sugar. Check out your portfolio center. Please also check ongoing floating volatility patterns of Exchange Income and Rogers Sugar.

Diversification Opportunities for Exchange Income and Rogers Sugar

0.91

Correlation Coefficient

Exchange Income  Rogers Sugar

Almost no diversification

The 3 months correlation between Exchange and Rogers is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Exchange Income and Rogers Sugar in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rogers Sugar and Exchange Income 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 Exchange Income are associated (or correlated) with Rogers Sugar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rogers Sugar has no effect on the direction of Exchange Income i.e., Exchange Income and Rogers Sugar go up and down completely randomly.

Pair Corralation between Exchange Income and Rogers Sugar

Assuming the 90 days trading horizon Exchange Income is expected to under-perform the Rogers Sugar. In addition to that, Exchange Income is 1.11 times more volatile than Rogers Sugar. It trades about -0.18 of its total potential returns per unit of risk. Rogers Sugar is currently generating about -0.09 per unit of volatility. If you would invest  577.00  in Rogers Sugar on December 30, 2024 and sell it today you would lose (37.00) from holding Rogers Sugar or give up 6.41% of portfolio value over 90 days.

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

Exchange Income  vs.  Rogers Sugar

Exchange Income

Risk-Adjusted Performance

Very Weak

Over the last 90 days Exchange Income has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's technical and fundamental indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Rogers Sugar

Risk-Adjusted Performance

Very Weak

Over the last 90 days Rogers Sugar has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy forward indicators, Rogers Sugar is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Exchange Income and Rogers Sugar

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

The idea behind Exchange Income and Rogers Sugar 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.