Correlation Between Village Super and GENERAL

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

Diversification Opportunities for Village Super and GENERAL

0.25

Correlation Coefficient

Village Super  GENERAL

Modest diversification

The 3 months correlation between Village and GENERAL is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Village Super Market and GENERAL ELEC CAP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GENERAL ELEC CAP 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 GENERAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GENERAL ELEC CAP has no effect on the direction of Village Super i.e., Village Super and GENERAL go up and down completely randomly.

Pair Corralation between Village Super and GENERAL

Assuming the 90 days horizon Village Super Market is expected to generate 2.46 times more return on investment than GENERAL. However, Village Super is 2.46 times more volatile than GENERAL ELEC CAP. It trades about 0.08 of its potential returns per unit of risk. GENERAL ELEC CAP is currently generating about -0.14 per unit of risk. If you would invest  2,963  in Village Super Market on October 26, 2024 and sell it today you would earn a total of  346.00  from holding Village Super Market or generate 11.68% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	33.9%
Values	Daily Returns

Village Super Market  vs.  GENERAL ELEC CAP

Village Super Market

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Village Super Market are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak technical and fundamental indicators, Village Super sustained solid returns over the last few months and may actually be approaching a breakup point.

GENERAL ELEC CAP

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Village Super and GENERAL

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

The idea behind Village Super Market and GENERAL ELEC CAP 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.