Correlation Between SFS REAL and CHAMPION BREWERIES

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

By analyzing existing cross correlation between SFS REAL ESTATE and CHAMPION BREWERIES PLC, you can compare the effects of market volatilities on SFS REAL and CHAMPION BREWERIES 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 SFS REAL with a short position of CHAMPION BREWERIES. Check out your portfolio center. Please also check ongoing floating volatility patterns of SFS REAL and CHAMPION BREWERIES.

Diversification Opportunities for SFS REAL and CHAMPION BREWERIES

0.0

Correlation Coefficient

SFS REAL  CHAMPION BREWERIES

Pay attention - limited upside

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

Pair Corralation between SFS REAL and CHAMPION BREWERIES

Assuming the 90 days trading horizon SFS REAL ESTATE is expected to generate 0.46 times more return on investment than CHAMPION BREWERIES. However, SFS REAL ESTATE is 2.19 times less risky than CHAMPION BREWERIES. It trades about 0.17 of its potential returns per unit of risk. CHAMPION BREWERIES PLC is currently generating about 0.04 per unit of risk. If you would invest  8,685  in SFS REAL ESTATE on October 3, 2024 and sell it today you would earn a total of  9,260  from holding SFS REAL ESTATE or generate 106.62% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	95.04%
Values	Daily Returns

SFS REAL ESTATE  vs.  CHAMPION BREWERIES PLC

SFS REAL ESTATE

Risk-Adjusted Performance

0 of 100

Very Weak

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

CHAMPION BREWERIES PLC

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in CHAMPION BREWERIES PLC are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very inconsistent basic indicators, CHAMPION BREWERIES displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SFS REAL and CHAMPION BREWERIES

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

The idea behind SFS REAL ESTATE and CHAMPION BREWERIES 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.