Correlation Between SENECA FOODS-A and Suncorp Group

Can any of the company-specific risk be diversified away by investing in both SENECA FOODS-A and Suncorp Group 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 Suncorp Group 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 Suncorp Group Limited, you can compare the effects of market volatilities on SENECA FOODS-A and Suncorp Group 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 Suncorp Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of SENECA FOODS-A and Suncorp Group.

Diversification Opportunities for SENECA FOODS-A and Suncorp Group

0.52

Correlation Coefficient

SENECA FOODS-A  Suncorp Group

Very weak diversification

The 3 months correlation between SENECA and Suncorp is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding SENECA FOODS A and Suncorp Group Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Suncorp Group Limited 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 Suncorp Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Suncorp Group Limited has no effect on the direction of SENECA FOODS-A i.e., SENECA FOODS-A and Suncorp Group go up and down completely randomly.

Pair Corralation between SENECA FOODS-A and Suncorp Group

Assuming the 90 days trading horizon SENECA FOODS A is expected to generate 0.97 times more return on investment than Suncorp Group. However, SENECA FOODS A is 1.03 times less risky than Suncorp Group. It trades about 0.25 of its potential returns per unit of risk. Suncorp Group Limited is currently generating about -0.11 per unit of risk. If you would invest  6,700  in SENECA FOODS A on October 5, 2024 and sell it today you would earn a total of  700.00  from holding SENECA FOODS A or generate 10.45% return on investment over 90 days.

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

SENECA FOODS A  vs.  Suncorp Group Limited

SENECA FOODS A

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in SENECA FOODS A are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile technical and fundamental indicators, SENECA FOODS-A exhibited solid returns over the last few months and may actually be approaching a breakup point.

Suncorp Group Limited

Risk-Adjusted Performance

0 of 100

Insignificant

Over the last 90 days Suncorp Group Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Suncorp Group 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 Suncorp Group

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

The idea behind SENECA FOODS A and Suncorp Group Limited 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.