Correlation Between Supermarket Income and Ajax Resources

Can any of the company-specific risk be diversified away by investing in both Supermarket Income and Ajax Resources 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 Supermarket Income and Ajax Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Supermarket Income REIT and Ajax Resources PLC, you can compare the effects of market volatilities on Supermarket Income and Ajax Resources 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 Supermarket Income with a short position of Ajax Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Supermarket Income and Ajax Resources.

Diversification Opportunities for Supermarket Income and Ajax Resources

0.0

Correlation Coefficient

Supermarket Income  Ajax Resources

Pay attention - limited upside

The 3 months correlation between Supermarket and Ajax is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Supermarket Income REIT and Ajax Resources PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ajax Resources PLC and Supermarket Income 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 Supermarket Income REIT are associated (or correlated) with Ajax Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ajax Resources PLC has no effect on the direction of Supermarket Income i.e., Supermarket Income and Ajax Resources go up and down completely randomly.

Pair Corralation between Supermarket Income and Ajax Resources

Assuming the 90 days trading horizon Supermarket Income REIT is expected to under-perform the Ajax Resources. But the stock apears to be less risky and, when comparing its historical volatility, Supermarket Income REIT is 1.41 times less risky than Ajax Resources. The stock trades about -0.08 of its potential returns per unit of risk. The Ajax Resources PLC is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest  325.00  in Ajax Resources PLC on October 25, 2024 and sell it today you would lose (25.00) from holding Ajax Resources PLC or give up 7.69% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Supermarket Income REIT  vs.  Ajax Resources PLC

Supermarket Income REIT

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Supermarket Income REIT has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain 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.

Ajax Resources PLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ajax Resources PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Ajax Resources is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Supermarket Income and Ajax Resources

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

The idea behind Supermarket Income REIT and Ajax Resources PLC 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.