Correlation Between Indexco Limited and Pick N

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

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

Diversification Opportunities for Indexco Limited and Pick N

-0.58

Correlation Coefficient

Indexco Limited  Pick N

Excellent diversification

The 3 months correlation between Indexco and Pick is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Indexco Limited and Pick N Pay in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pick N Pay and Indexco Limited 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 Indexco Limited are associated (or correlated) with Pick N. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pick N Pay has no effect on the direction of Indexco Limited i.e., Indexco Limited and Pick N go up and down completely randomly.

Pair Corralation between Indexco Limited and Pick N

Assuming the 90 days trading horizon Indexco Limited is expected to generate 0.47 times more return on investment than Pick N. However, Indexco Limited is 2.12 times less risky than Pick N. It trades about 0.15 of its potential returns per unit of risk. Pick N Pay is currently generating about -0.05 per unit of risk. If you would invest  418,400  in Indexco Limited on December 29, 2024 and sell it today you would earn a total of  31,000  from holding Indexco Limited or generate 7.41% return on investment over 90 days.

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

Indexco Limited   vs.  Pick N Pay

Indexco Limited

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Indexco Limited are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak fundamental indicators, Indexco Limited may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pick N Pay

Risk-Adjusted Performance

Very Weak

Over the last 90 days Pick N Pay has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Pick N is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Indexco Limited and Pick N

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

The idea behind Indexco Limited and Pick N Pay 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.