Correlation Between Growthpoint Properties and Shoprite Holdings
Can any of the company-specific risk be diversified away by investing in both Growthpoint Properties 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 Growthpoint Properties and Shoprite Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Growthpoint Properties and Shoprite Holdings, you can compare the effects of market volatilities on Growthpoint Properties 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 Growthpoint Properties with a short position of Shoprite Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Growthpoint Properties and Shoprite Holdings.
Diversification Opportunities for Growthpoint Properties and Shoprite Holdings
-0.3 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Growthpoint and Shoprite is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Growthpoint Properties and Shoprite Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shoprite Holdings and Growthpoint Properties 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 Growthpoint Properties 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 Growthpoint Properties i.e., Growthpoint Properties and Shoprite Holdings go up and down completely randomly.
Pair Corralation between Growthpoint Properties and Shoprite Holdings
Assuming the 90 days trading horizon Growthpoint Properties is expected to generate 2.12 times less return on investment than Shoprite Holdings. But when comparing it to its historical volatility, Growthpoint Properties is 1.06 times less risky than Shoprite Holdings. It trades about 0.03 of its potential returns per unit of risk. Shoprite Holdings is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 2,188,713 in Shoprite Holdings on August 27, 2024 and sell it today you would earn a total of 862,287 from holding Shoprite Holdings or generate 39.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Growthpoint Properties vs. Shoprite Holdings
Performance |
| Timeline |
| Growthpoint Properties |
| Shoprite Holdings |
Growthpoint Properties and Shoprite Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Growthpoint Properties and Shoprite Holdings
The main advantage of trading using opposite Growthpoint Properties and Shoprite Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Growthpoint Properties 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.| Growthpoint Properties vs. Blue Label Telecoms | Growthpoint Properties vs. Harmony Gold Mining | Growthpoint Properties vs. HomeChoice Investments | Growthpoint Properties vs. City Lodge Hotels |
| Shoprite Holdings vs. Pick N Pay | Shoprite Holdings vs. Growthpoint Properties | Shoprite Holdings vs. AfricaRhodium ETF | Shoprite Holdings vs. CoreShares Preference Share |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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