Correlation Between Mr Price and Clicks

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

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

Diversification Opportunities for Mr Price and Clicks

0.68

Correlation Coefficient

Mr Price  Clicks

Poor diversification

The 3 months correlation between MRP and Clicks is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Mr Price Group and Clicks in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Clicks and Mr Price 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 Mr Price Group are associated (or correlated) with Clicks. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Clicks has no effect on the direction of Mr Price i.e., Mr Price and Clicks go up and down completely randomly.

Pair Corralation between Mr Price and Clicks

Assuming the 90 days trading horizon Mr Price Group is expected to generate 1.32 times more return on investment than Clicks. However, Mr Price is 1.32 times more volatile than Clicks. It trades about 0.21 of its potential returns per unit of risk. Clicks is currently generating about 0.13 per unit of risk. If you would invest  1,639,250  in Mr Price Group on September 24, 2024 and sell it today you would earn a total of  1,338,150  from holding Mr Price Group or generate 81.63% return on investment over 90 days.

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

Mr Price Group  vs.  Clicks

Mr Price Group

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Mr Price Group are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Mr Price exhibited solid returns over the last few months and may actually be approaching a breakup point.

Clicks

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Clicks has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Clicks is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Mr Price and Clicks

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

The idea behind Mr Price Group and Clicks 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.