Correlation Between CoreShares Preference and Shoprite Holdings

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

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

Diversification Opportunities for CoreShares Preference and Shoprite Holdings

0.0

Correlation Coefficient

CoreShares Preference  Shoprite Holdings

Pay attention - limited upside

The 3 months correlation between CoreShares and Shoprite is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding CoreShares Preference Share and Shoprite Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shoprite Holdings and CoreShares Preference 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 CoreShares Preference Share are associated (or correlated) with Shoprite Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shoprite Holdings has no effect on the direction of CoreShares Preference i.e., CoreShares Preference and Shoprite Holdings go up and down completely randomly.

Pair Corralation between CoreShares Preference and Shoprite Holdings

If you would invest  98,500  in CoreShares Preference Share on December 2, 2024 and sell it today you would earn a total of  0.00  from holding CoreShares Preference Share or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	98.39%
Values	Daily Returns

CoreShares Preference Share  vs.  Shoprite Holdings

CoreShares Preference

Risk-Adjusted Performance

Very Weak

Over the last 90 days CoreShares Preference Share has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong technical and fundamental indicators, CoreShares Preference is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Shoprite Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days Shoprite Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with CoreShares Preference and Shoprite Holdings

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

The idea behind CoreShares Preference Share and Shoprite Holdings 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.