Correlation Between Ironveld Plc and Supermarket Income

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

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

Diversification Opportunities for Ironveld Plc and Supermarket Income

-0.28

Correlation Coefficient

Ironveld Plc  Supermarket Income

Very good diversification

The 3 months correlation between Ironveld and Supermarket is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Ironveld Plc and Supermarket Income REIT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Supermarket Income REIT and Ironveld Plc 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 Ironveld Plc are associated (or correlated) with Supermarket Income. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Supermarket Income REIT has no effect on the direction of Ironveld Plc i.e., Ironveld Plc and Supermarket Income go up and down completely randomly.

Pair Corralation between Ironveld Plc and Supermarket Income

Assuming the 90 days trading horizon Ironveld Plc is expected to generate 1.11 times more return on investment than Supermarket Income. However, Ironveld Plc is 1.11 times more volatile than Supermarket Income REIT. It trades about 0.02 of its potential returns per unit of risk. Supermarket Income REIT is currently generating about -0.06 per unit of risk. If you would invest  3.80  in Ironveld Plc on October 8, 2024 and sell it today you would earn a total of  0.05  from holding Ironveld Plc or generate 1.32% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.39%
Values	Daily Returns

Ironveld Plc  vs.  Supermarket Income REIT

Ironveld Plc

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Ironveld Plc are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Ironveld Plc is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Supermarket Income REIT

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Supermarket Income REIT has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Supermarket Income is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Ironveld Plc and Supermarket Income

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

The idea behind Ironveld Plc and Supermarket Income REIT 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.