Correlation Between Sappe Public and RB Food

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

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

Diversification Opportunities for Sappe Public and RB Food

0.37

Correlation Coefficient

Sappe Public  RB Food

Weak diversification

The 3 months correlation between Sappe and RBF is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Sappe Public and RB Food Supply in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RB Food Supply and Sappe Public 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 Sappe Public are associated (or correlated) with RB Food. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RB Food Supply has no effect on the direction of Sappe Public i.e., Sappe Public and RB Food go up and down completely randomly.

Pair Corralation between Sappe Public and RB Food

Assuming the 90 days trading horizon Sappe Public is expected to under-perform the RB Food. But the stock apears to be less risky and, when comparing its historical volatility, Sappe Public is 1.38 times less risky than RB Food. The stock trades about -0.25 of its potential returns per unit of risk. The RB Food Supply is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest  590.00  in RB Food Supply on September 25, 2024 and sell it today you would earn a total of  110.00  from holding RB Food Supply or generate 18.64% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.0%
Values	Daily Returns

Sappe Public  vs.  RB Food Supply

Sappe Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sappe Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental drivers, Sappe Public is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

RB Food Supply

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in RB Food Supply are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite quite weak technical and fundamental indicators, RB Food may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Sappe Public and RB Food

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

The idea behind Sappe Public and RB Food Supply 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.