Correlation Between Village Super and Mamas Creations

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

By analyzing existing cross correlation between Village Super Market and Mamas Creations, you can compare the effects of market volatilities on Village Super and Mamas Creations 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 Village Super with a short position of Mamas Creations. Check out your portfolio center. Please also check ongoing floating volatility patterns of Village Super and Mamas Creations.

Diversification Opportunities for Village Super and Mamas Creations

0.4

Correlation Coefficient

Village Super  Mamas Creations

Very weak diversification

The 3 months correlation between Village and Mamas is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Village Super Market and Mamas Creations in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mamas Creations and Village Super 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 Village Super Market are associated (or correlated) with Mamas Creations. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mamas Creations has no effect on the direction of Village Super i.e., Village Super and Mamas Creations go up and down completely randomly.

Pair Corralation between Village Super and Mamas Creations

Assuming the 90 days horizon Village Super Market is expected to generate 0.39 times more return on investment than Mamas Creations. However, Village Super Market is 2.53 times less risky than Mamas Creations. It trades about 0.02 of its potential returns per unit of risk. Mamas Creations is currently generating about -0.26 per unit of risk. If you would invest  3,026  in Village Super Market on October 10, 2024 and sell it today you would earn a total of  12.00  from holding Village Super Market or generate 0.4% return on investment over 90 days.

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

Village Super Market  vs.  Mamas Creations

Village Super Market

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Village Super Market has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong technical and fundamental indicators, Village Super is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Mamas Creations

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mamas Creations has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unfluctuating performance, the Stock's primary indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Village Super and Mamas Creations

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

The idea behind Village Super Market and Mamas Creations 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.