Correlation Between SGHC and Wingstop

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

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

Diversification Opportunities for SGHC and Wingstop

0.16

Correlation Coefficient

SGHC  Wingstop

Average diversification

The 3 months correlation between SGHC and Wingstop is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding SGHC Limited and Wingstop in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wingstop and SGHC 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 SGHC Limited are associated (or correlated) with Wingstop. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wingstop has no effect on the direction of SGHC i.e., SGHC and Wingstop go up and down completely randomly.

Pair Corralation between SGHC and Wingstop

Given the investment horizon of 90 days SGHC Limited is expected to generate 1.14 times more return on investment than Wingstop. However, SGHC is 1.14 times more volatile than Wingstop. It trades about 0.05 of its potential returns per unit of risk. Wingstop is currently generating about -0.11 per unit of risk. If you would invest  621.00  in SGHC Limited on December 28, 2024 and sell it today you would earn a total of  41.00  from holding SGHC Limited or generate 6.6% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

SGHC Limited  vs.  Wingstop

SGHC Limited

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in SGHC Limited are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak technical indicators, SGHC may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Wingstop

Risk-Adjusted Performance

Very Weak

Over the last 90 days Wingstop has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with SGHC and Wingstop

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

The idea behind SGHC Limited and Wingstop 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.