Correlation Between Pact Group and Retail Food

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

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

Diversification Opportunities for Pact Group and Retail Food

-0.46

Correlation Coefficient

Pact Group  Retail Food

Very good diversification

The 3 months correlation between Pact and Retail is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Pact Group Holdings and Retail Food Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Retail Food Group and Pact Group 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 Pact Group Holdings are associated (or correlated) with Retail Food. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Retail Food Group has no effect on the direction of Pact Group i.e., Pact Group and Retail Food go up and down completely randomly.

Pair Corralation between Pact Group and Retail Food

Assuming the 90 days trading horizon Pact Group Holdings is expected to generate 0.26 times more return on investment than Retail Food. However, Pact Group Holdings is 3.8 times less risky than Retail Food. It trades about 0.0 of its potential returns per unit of risk. Retail Food Group is currently generating about -0.2 per unit of risk. If you would invest  80.00  in Pact Group Holdings on September 27, 2024 and sell it today you would earn a total of  0.00  from holding Pact Group Holdings or generate 0.0% return on investment over 90 days.

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

Pact Group Holdings  vs.  Retail Food Group

Pact Group Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

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

Retail Food Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Retail Food Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable technical and fundamental indicators, Retail Food 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 Pact Group and Retail Food

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

The idea behind Pact Group Holdings and Retail Food 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.