Correlation Between SENECA FOODS-A and FirstGroup Plc

Can any of the company-specific risk be diversified away by investing in both SENECA FOODS-A and FirstGroup Plc 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 SENECA FOODS-A and FirstGroup Plc into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between SENECA FOODS A and FirstGroup plc, you can compare the effects of market volatilities on SENECA FOODS-A and FirstGroup Plc 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 SENECA FOODS-A with a short position of FirstGroup Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of SENECA FOODS-A and FirstGroup Plc.

Diversification Opportunities for SENECA FOODS-A and FirstGroup Plc

0.0

Correlation Coefficient

SENECA FOODS-A  FirstGroup Plc

Pay attention - limited upside

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

Pair Corralation between SENECA FOODS-A and FirstGroup Plc

If you would invest  5,250  in SENECA FOODS A on September 9, 2024 and sell it today you would earn a total of  1,400  from holding SENECA FOODS A or generate 26.67% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

SENECA FOODS A  vs.  FirstGroup plc

SENECA FOODS A

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in SENECA FOODS A are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak technical and fundamental indicators, SENECA FOODS-A exhibited solid returns over the last few months and may actually be approaching a breakup point.

FirstGroup plc

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in FirstGroup plc are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, FirstGroup Plc is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with SENECA FOODS-A and FirstGroup Plc

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

The idea behind SENECA FOODS A and FirstGroup 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.