Correlation Between GLG LIFE and Shoprite Holdings
Can any of the company-specific risk be diversified away by investing in both GLG LIFE 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 GLG LIFE and Shoprite Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GLG LIFE TECH and Shoprite Holdings Limited, you can compare the effects of market volatilities on GLG LIFE 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 GLG LIFE with a short position of Shoprite Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of GLG LIFE and Shoprite Holdings.
Diversification Opportunities for GLG LIFE and Shoprite Holdings
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between GLG and Shoprite is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding GLG LIFE TECH and Shoprite Holdings Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shoprite Holdings and GLG LIFE 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 GLG LIFE TECH 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 GLG LIFE i.e., GLG LIFE and Shoprite Holdings go up and down completely randomly.
Pair Corralation between GLG LIFE and Shoprite Holdings
If you would invest 1,510 in Shoprite Holdings Limited on September 13, 2024 and sell it today you would earn a total of 80.00 from holding Shoprite Holdings Limited or generate 5.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 97.67% |
| Values | Daily Returns |
GLG LIFE TECH vs. Shoprite Holdings Limited
Performance |
| Timeline |
| GLG LIFE TECH |
| Shoprite Holdings |
GLG LIFE and Shoprite Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GLG LIFE and Shoprite Holdings
The main advantage of trading using opposite GLG LIFE and Shoprite Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GLG LIFE 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.The idea behind GLG LIFE TECH and Shoprite Holdings 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.| 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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