Correlation Between Lion Biotechnologies and Shoprite Holdings
Can any of the company-specific risk be diversified away by investing in both Lion Biotechnologies and Shoprite Holdings 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 Lion Biotechnologies and Shoprite Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lion Biotechnologies and Shoprite Holdings Limited, you can compare the effects of market volatilities on Lion Biotechnologies and Shoprite Holdings 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 Lion Biotechnologies with a short position of Shoprite Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lion Biotechnologies and Shoprite Holdings.
Diversification Opportunities for Lion Biotechnologies and Shoprite Holdings
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Lion and Shoprite is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Lion Biotechnologies and Shoprite Holdings Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shoprite Holdings and Lion Biotechnologies 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 Lion Biotechnologies are associated (or correlated) with Shoprite Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shoprite Holdings has no effect on the direction of Lion Biotechnologies i.e., Lion Biotechnologies and Shoprite Holdings go up and down completely randomly.
Pair Corralation between Lion Biotechnologies and Shoprite Holdings
Assuming the 90 days trading horizon Lion Biotechnologies is expected to under-perform the Shoprite Holdings. In addition to that, Lion Biotechnologies is 2.61 times more volatile than Shoprite Holdings Limited. It trades about -0.11 of its total potential returns per unit of risk. Shoprite Holdings Limited is currently generating about -0.05 per unit of volatility. If you would invest 1,620 in Shoprite Holdings Limited on September 13, 2024 and sell it today you would lose (30.00) from holding Shoprite Holdings Limited or give up 1.85% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lion Biotechnologies vs. Shoprite Holdings Limited
Performance |
| Timeline |
| Lion Biotechnologies |
| Shoprite Holdings |
Lion Biotechnologies and Shoprite Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lion Biotechnologies and Shoprite Holdings
The main advantage of trading using opposite Lion Biotechnologies and Shoprite Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lion Biotechnologies position performs unexpectedly, Shoprite Holdings 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 Shoprite Holdings will offset losses from the drop in Shoprite Holdings' long position.| Lion Biotechnologies vs. Apple Inc | Lion Biotechnologies vs. Apple Inc | Lion Biotechnologies vs. Apple Inc | Lion Biotechnologies vs. Apple Inc |
| Shoprite Holdings vs. Constellation Software | Shoprite Holdings vs. MAGIC SOFTWARE ENTR | Shoprite Holdings vs. Lion Biotechnologies | Shoprite Holdings vs. GLG LIFE TECH |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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