Correlation Between CA Sales and Shoprite Holdings
Can any of the company-specific risk be diversified away by investing in both CA Sales 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 CA Sales and Shoprite Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CA Sales Holdings and Shoprite Holdings, you can compare the effects of market volatilities on CA Sales 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 CA Sales with a short position of Shoprite Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of CA Sales and Shoprite Holdings.
Diversification Opportunities for CA Sales and Shoprite Holdings
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between CAA and Shoprite is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding CA Sales Holdings and Shoprite Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shoprite Holdings and CA Sales 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 CA Sales Holdings 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 CA Sales i.e., CA Sales and Shoprite Holdings go up and down completely randomly.
Pair Corralation between CA Sales and Shoprite Holdings
Assuming the 90 days trading horizon CA Sales Holdings is expected to generate 1.9 times more return on investment than Shoprite Holdings. However, CA Sales is 1.9 times more volatile than Shoprite Holdings. It trades about 0.02 of its potential returns per unit of risk. Shoprite Holdings is currently generating about -0.08 per unit of risk. If you would invest 157,500 in CA Sales Holdings on August 31, 2024 and sell it today you would earn a total of 600.00 from holding CA Sales Holdings or generate 0.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
CA Sales Holdings vs. Shoprite Holdings
Performance |
| Timeline |
| CA Sales Holdings |
| Shoprite Holdings |
CA Sales and Shoprite Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CA Sales and Shoprite Holdings
The main advantage of trading using opposite CA Sales and Shoprite Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CA Sales 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.| CA Sales vs. Kap Industrial Holdings | CA Sales vs. City Lodge Hotels | CA Sales vs. RCL Foods | CA Sales vs. E Media Holdings |
| Shoprite Holdings vs. Harmony Gold Mining | Shoprite Holdings vs. Deneb Investments | Shoprite Holdings vs. City Lodge Hotels | Shoprite Holdings vs. Zeder Investments |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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