Correlation Between SHOPRITE HLDG and Addtech AB

Can any of the company-specific risk be diversified away by investing in both SHOPRITE HLDG and Addtech AB 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 SHOPRITE HLDG and Addtech AB into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for SHOPRITE HLDG and Addtech AB

0.37

Correlation Coefficient

SHOPRITE HLDG  Addtech AB

Weak diversification

The 3 months correlation between SHOPRITE and Addtech is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding SHOPRITE HLDG and Addtech AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Addtech AB and SHOPRITE HLDG 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 SHOPRITE HLDG are associated (or correlated) with Addtech AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Addtech AB has no effect on the direction of SHOPRITE HLDG i.e., SHOPRITE HLDG and Addtech AB go up and down completely randomly.

Pair Corralation between SHOPRITE HLDG and Addtech AB

Assuming the 90 days trading horizon SHOPRITE HLDG is expected to under-perform the Addtech AB. In addition to that, SHOPRITE HLDG is 1.02 times more volatile than Addtech AB. It trades about -0.12 of its total potential returns per unit of risk. Addtech AB is currently generating about 0.03 per unit of volatility. If you would invest  2,618  in Addtech AB on October 10, 2024 and sell it today you would earn a total of  36.00  from holding Addtech AB or generate 1.38% return on investment over 90 days.

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

SHOPRITE HLDG  vs.  Addtech AB

SHOPRITE HLDG

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in SHOPRITE HLDG are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, SHOPRITE HLDG is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Addtech AB

Risk-Adjusted Performance

3 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Addtech AB are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Addtech AB is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with SHOPRITE HLDG and Addtech AB

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

The idea behind SHOPRITE HLDG and Addtech AB 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.