Correlation Between Pets At and RS GROUP

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

By analyzing existing cross correlation between Pets at Home and RS GROUP PLC, you can compare the effects of market volatilities on Pets At and RS GROUP 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 Pets At with a short position of RS GROUP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pets At and RS GROUP.

Diversification Opportunities for Pets At and RS GROUP

-0.09

Correlation Coefficient

Pets At  RS GROUP

Good diversification

The 3 months correlation between Pets and RS1 is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Pets at Home and RS GROUP PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RS GROUP PLC and Pets At 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 Pets at Home are associated (or correlated) with RS GROUP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RS GROUP PLC has no effect on the direction of Pets At i.e., Pets At and RS GROUP go up and down completely randomly.

Pair Corralation between Pets At and RS GROUP

Assuming the 90 days trading horizon Pets at Home is expected to generate 1.16 times more return on investment than RS GROUP. However, Pets At is 1.16 times more volatile than RS GROUP PLC. It trades about -0.08 of its potential returns per unit of risk. RS GROUP PLC is currently generating about -0.1 per unit of risk. If you would invest  29,738  in Pets at Home on December 5, 2024 and sell it today you would lose (6,878) from holding Pets at Home or give up 23.13% of portfolio value over 90 days.

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

Pets at Home  vs.  RS GROUP PLC

Pets at Home

Risk-Adjusted Performance

Weak

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

RS GROUP PLC

Risk-Adjusted Performance

Very Weak

Over the last 90 days RS GROUP PLC 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.

Pair Trading with Pets At and RS GROUP

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

The idea behind Pets at Home and RS GROUP PLC 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 Valuation module to check real value of public entities based on technical and fundamental data.