Correlation Between Shoprite Holdings and Henderson Investment

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

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

Diversification Opportunities for Shoprite Holdings and Henderson Investment

-0.79

Correlation Coefficient

Shoprite Holdings  Henderson Investment

Pay attention - limited upside

The 3 months correlation between Shoprite and Henderson is -0.79. Overlapping area represents the amount of risk that can be diversified away by holding Shoprite Holdings Limited and Henderson Investment Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Henderson Investment and Shoprite Holdings 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 Shoprite Holdings Limited are associated (or correlated) with Henderson Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Henderson Investment has no effect on the direction of Shoprite Holdings i.e., Shoprite Holdings and Henderson Investment go up and down completely randomly.

Pair Corralation between Shoprite Holdings and Henderson Investment

If you would invest  1,633  in Shoprite Holdings Limited on October 6, 2024 and sell it today you would earn a total of  0.00  from holding Shoprite Holdings Limited or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	5.0%
Values	Daily Returns

Shoprite Holdings Limited  vs.  Henderson Investment Ltd

Shoprite Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Shoprite Holdings Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, Shoprite Holdings is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Henderson Investment

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Henderson Investment Ltd has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Shoprite Holdings and Henderson Investment

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

The idea behind Shoprite Holdings Limited and Henderson Investment Ltd 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.