Correlation Between Super Retail and ECS Botanics

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

By analyzing existing cross correlation between Super Retail Group and ECS Botanics Holdings, you can compare the effects of market volatilities on Super Retail and ECS Botanics 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 Super Retail with a short position of ECS Botanics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Super Retail and ECS Botanics.

Diversification Opportunities for Super Retail and ECS Botanics

0.75

Correlation Coefficient

Super Retail  ECS Botanics

Poor diversification

The 3 months correlation between Super and ECS is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Super Retail Group and ECS Botanics Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ECS Botanics Holdings and Super Retail 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 Super Retail Group are associated (or correlated) with ECS Botanics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ECS Botanics Holdings has no effect on the direction of Super Retail i.e., Super Retail and ECS Botanics go up and down completely randomly.

Pair Corralation between Super Retail and ECS Botanics

Assuming the 90 days trading horizon Super Retail Group is expected to generate 0.41 times more return on investment than ECS Botanics. However, Super Retail Group is 2.46 times less risky than ECS Botanics. It trades about 0.1 of its potential returns per unit of risk. ECS Botanics Holdings is currently generating about -0.03 per unit of risk. If you would invest  1,450  in Super Retail Group on October 10, 2024 and sell it today you would earn a total of  78.00  from holding Super Retail Group or generate 5.38% return on investment over 90 days.

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

Super Retail Group  vs.  ECS Botanics Holdings

Super Retail Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Super Retail Group 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 essential indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

ECS Botanics Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ECS Botanics Holdings 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 comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Super Retail and ECS Botanics

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

The idea behind Super Retail Group and ECS Botanics Holdings 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.