Correlation Between Maple Leaf and SATO Technologies

Can any of the company-specific risk be diversified away by investing in both Maple Leaf and SATO Technologies 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 Maple Leaf and SATO Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Maple Leaf Foods and SATO Technologies Corp, you can compare the effects of market volatilities on Maple Leaf and SATO Technologies 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 Maple Leaf with a short position of SATO Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Maple Leaf and SATO Technologies.

Diversification Opportunities for Maple Leaf and SATO Technologies

-0.76

Correlation Coefficient

Maple Leaf  SATO Technologies

Pay attention - limited upside

The 3 months correlation between Maple and SATO is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding Maple Leaf Foods and SATO Technologies Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SATO Technologies Corp and Maple Leaf 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 Maple Leaf Foods are associated (or correlated) with SATO Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SATO Technologies Corp has no effect on the direction of Maple Leaf i.e., Maple Leaf and SATO Technologies go up and down completely randomly.

Pair Corralation between Maple Leaf and SATO Technologies

Assuming the 90 days trading horizon Maple Leaf Foods is expected to generate 0.47 times more return on investment than SATO Technologies. However, Maple Leaf Foods is 2.13 times less risky than SATO Technologies. It trades about 0.2 of its potential returns per unit of risk. SATO Technologies Corp is currently generating about -0.08 per unit of risk. If you would invest  1,949  in Maple Leaf Foods on December 28, 2024 and sell it today you would earn a total of  543.00  from holding Maple Leaf Foods or generate 27.86% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.41%
Values	Daily Returns

Maple Leaf Foods  vs.  SATO Technologies Corp

Maple Leaf Foods

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Maple Leaf Foods are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of very weak forward indicators, Maple Leaf displayed solid returns over the last few months and may actually be approaching a breakup point.

SATO Technologies Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days SATO Technologies Corp 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 basic indicators remain fairly stable which may send shares a bit higher in April 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Maple Leaf and SATO Technologies

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

The idea behind Maple Leaf Foods and SATO Technologies Corp 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.