Correlation Between Starbucks and SUPER HI

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

By analyzing existing cross correlation between Starbucks and SUPER HI INTERNATIONAL, you can compare the effects of market volatilities on Starbucks and SUPER HI 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 Starbucks with a short position of SUPER HI. Check out your portfolio center. Please also check ongoing floating volatility patterns of Starbucks and SUPER HI.

Diversification Opportunities for Starbucks and SUPER HI

-0.63

Correlation Coefficient

Starbucks  SUPER HI

Excellent diversification

The 3 months correlation between Starbucks and SUPER is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Starbucks and SUPER HI INTERNATIONAL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SUPER HI INTERNATIONAL and Starbucks 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 Starbucks are associated (or correlated) with SUPER HI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SUPER HI INTERNATIONAL has no effect on the direction of Starbucks i.e., Starbucks and SUPER HI go up and down completely randomly.

Pair Corralation between Starbucks and SUPER HI

Given the investment horizon of 90 days Starbucks is expected to generate 0.52 times more return on investment than SUPER HI. However, Starbucks is 1.92 times less risky than SUPER HI. It trades about 0.13 of its potential returns per unit of risk. SUPER HI INTERNATIONAL is currently generating about 0.0 per unit of risk. If you would invest  8,697  in Starbucks on December 21, 2024 and sell it today you would earn a total of  1,231  from holding Starbucks or generate 14.15% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.33%
Values	Daily Returns

Starbucks  vs.  SUPER HI INTERNATIONAL

Starbucks

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Starbucks are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile basic indicators, Starbucks showed solid returns over the last few months and may actually be approaching a breakup point.

SUPER HI INTERNATIONAL

Risk-Adjusted Performance

Very Weak

Over the last 90 days SUPER HI INTERNATIONAL has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent fundamental indicators, SUPER HI is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Starbucks and SUPER HI

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

The idea behind Starbucks and SUPER HI INTERNATIONAL 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.

Check out your portfolio center.

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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.