Correlation Between Super Retail and Supply Network

Can any of the company-specific risk be diversified away by investing in both Super Retail and Supply Network 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 Supply Network 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 Supply Network, you can compare the effects of market volatilities on Super Retail and Supply Network 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 Supply Network. Check out your portfolio center. Please also check ongoing floating volatility patterns of Super Retail and Supply Network.

Diversification Opportunities for Super Retail and Supply Network

0.05

Correlation Coefficient

Super Retail  Supply Network

Significant diversification

The 3 months correlation between Super and Supply is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Super Retail Group and Supply Network in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Supply Network 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 Supply Network. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Supply Network has no effect on the direction of Super Retail i.e., Super Retail and Supply Network go up and down completely randomly.

Pair Corralation between Super Retail and Supply Network

Assuming the 90 days trading horizon Super Retail Group is expected to under-perform the Supply Network. But the stock apears to be less risky and, when comparing its historical volatility, Super Retail Group is 1.15 times less risky than Supply Network. The stock trades about -0.11 of its potential returns per unit of risk. The Supply Network is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  2,926  in Supply Network on October 24, 2024 and sell it today you would earn a total of  477.00  from holding Supply Network or generate 16.3% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.81%
Values	Daily Returns

Super Retail Group  vs.  Supply Network

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 comparatively stable essential indicators, Super Retail is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Supply Network

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Supply Network are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain essential indicators, Supply Network unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Super Retail and Supply Network

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

The idea behind Super Retail Group and Supply Network 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 Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.