Correlation Between Shoprite Holdings and Isetan Mitsukoshi

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

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

Diversification Opportunities for Shoprite Holdings and Isetan Mitsukoshi

0.65

Correlation Coefficient

Shoprite Holdings  Isetan Mitsukoshi

Poor diversification

The 3 months correlation between Shoprite and Isetan is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Shoprite Holdings Limited and Isetan Mitsukoshi Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Isetan Mitsukoshi and Shoprite Holdings 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 Holdings Limited are associated (or correlated) with Isetan Mitsukoshi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Isetan Mitsukoshi has no effect on the direction of Shoprite Holdings i.e., Shoprite Holdings and Isetan Mitsukoshi go up and down completely randomly.

Pair Corralation between Shoprite Holdings and Isetan Mitsukoshi

Assuming the 90 days horizon Shoprite Holdings Limited is expected to generate 0.71 times more return on investment than Isetan Mitsukoshi. However, Shoprite Holdings Limited is 1.42 times less risky than Isetan Mitsukoshi. It trades about -0.11 of its potential returns per unit of risk. Isetan Mitsukoshi Holdings is currently generating about -0.13 per unit of risk. If you would invest  1,504  in Shoprite Holdings Limited on December 27, 2024 and sell it today you would lose (164.00) from holding Shoprite Holdings Limited or give up 10.9% of portfolio value over 90 days.

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

Shoprite Holdings Limited  vs.  Isetan Mitsukoshi Holdings

Shoprite Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days Shoprite Holdings Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Isetan Mitsukoshi

Risk-Adjusted Performance

Very Weak

Over the last 90 days Isetan Mitsukoshi Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Shoprite Holdings and Isetan Mitsukoshi

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

The idea behind Shoprite Holdings Limited and Isetan Mitsukoshi 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.

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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.