Correlation Between Slate Grocery and South Pacific

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

By analyzing existing cross correlation between Slate Grocery REIT and South Pacific Metals, you can compare the effects of market volatilities on Slate Grocery and South Pacific 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 Slate Grocery with a short position of South Pacific. Check out your portfolio center. Please also check ongoing floating volatility patterns of Slate Grocery and South Pacific.

Diversification Opportunities for Slate Grocery and South Pacific

0.26

Correlation Coefficient

Slate Grocery  South Pacific

Modest diversification

The 3 months correlation between Slate and South is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Slate Grocery REIT and South Pacific Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on South Pacific Metals and Slate Grocery 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 Slate Grocery REIT are associated (or correlated) with South Pacific. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of South Pacific Metals has no effect on the direction of Slate Grocery i.e., Slate Grocery and South Pacific go up and down completely randomly.

Pair Corralation between Slate Grocery and South Pacific

Assuming the 90 days trading horizon Slate Grocery REIT is expected to under-perform the South Pacific. But the stock apears to be less risky and, when comparing its historical volatility, Slate Grocery REIT is 2.84 times less risky than South Pacific. The stock trades about -0.38 of its potential returns per unit of risk. The South Pacific Metals is currently generating about -0.07 of returns per unit of risk over similar time horizon. If you would invest  53.00  in South Pacific Metals on October 12, 2024 and sell it today you would lose (3.00) from holding South Pacific Metals or give up 5.66% of portfolio value over 90 days.

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

Slate Grocery REIT  vs.  South Pacific Metals

Slate Grocery REIT

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Slate Grocery REIT has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

South Pacific Metals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days South Pacific Metals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable primary indicators, South Pacific is not utilizing all of its potentials. The recent stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Slate Grocery and South Pacific

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

The idea behind Slate Grocery REIT and South Pacific Metals 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.