Correlation Between Mr Price and Rex Trueform

Can any of the company-specific risk be diversified away by investing in both Mr Price and Rex Trueform 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 Rex Trueform 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 Rex Trueform Group, you can compare the effects of market volatilities on Mr Price and Rex Trueform 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 Rex Trueform. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mr Price and Rex Trueform.

Diversification Opportunities for Mr Price and Rex Trueform

-0.71

Correlation Coefficient

Mr Price  Rex Trueform

Pay attention - limited upside

The 3 months correlation between MRP and Rex is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Mr Price Group and Rex Trueform Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rex Trueform Group 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 Rex Trueform. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rex Trueform Group has no effect on the direction of Mr Price i.e., Mr Price and Rex Trueform go up and down completely randomly.

Pair Corralation between Mr Price and Rex Trueform

Assuming the 90 days trading horizon Mr Price Group is expected to under-perform the Rex Trueform. But the stock apears to be less risky and, when comparing its historical volatility, Mr Price Group is 2.83 times less risky than Rex Trueform. The stock trades about -0.19 of its potential returns per unit of risk. The Rex Trueform Group is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  117,200  in Rex Trueform Group on December 25, 2024 and sell it today you would earn a total of  16,900  from holding Rex Trueform Group or generate 14.42% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.36%
Values	Daily Returns

Mr Price Group  vs.  Rex Trueform Group

Mr Price Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days Mr Price Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Rex Trueform Group

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Rex Trueform Group are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, Rex Trueform exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Mr Price and Rex Trueform

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

The idea behind Mr Price Group and Rex Trueform Group 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.