Correlation Between H2O Retailing and SHOPRITE HDGS
Can any of the company-specific risk be diversified away by investing in both H2O Retailing and SHOPRITE HDGS 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 H2O Retailing and SHOPRITE HDGS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between H2O Retailing and SHOPRITE HDGS ADR, you can compare the effects of market volatilities on H2O Retailing and SHOPRITE HDGS 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 H2O Retailing with a short position of SHOPRITE HDGS. Check out your portfolio center. Please also check ongoing floating volatility patterns of H2O Retailing and SHOPRITE HDGS.
Diversification Opportunities for H2O Retailing and SHOPRITE HDGS
-0.5 | Correlation Coefficient |
Very good diversification
The 3 months correlation between H2O and SHOPRITE is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding H2O Retailing and SHOPRITE HDGS ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SHOPRITE HDGS ADR and H2O Retailing 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 H2O Retailing are associated (or correlated) with SHOPRITE HDGS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SHOPRITE HDGS ADR has no effect on the direction of H2O Retailing i.e., H2O Retailing and SHOPRITE HDGS go up and down completely randomly.
Pair Corralation between H2O Retailing and SHOPRITE HDGS
Assuming the 90 days horizon H2O Retailing is expected to generate 0.79 times more return on investment than SHOPRITE HDGS. However, H2O Retailing is 1.26 times less risky than SHOPRITE HDGS. It trades about 0.05 of its potential returns per unit of risk. SHOPRITE HDGS ADR is currently generating about -0.01 per unit of risk. If you would invest 1,410 in H2O Retailing on November 4, 2024 and sell it today you would earn a total of 20.00 from holding H2O Retailing or generate 1.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
H2O Retailing vs. SHOPRITE HDGS ADR
Performance |
| Timeline |
| H2O Retailing |
| SHOPRITE HDGS ADR |
H2O Retailing and SHOPRITE HDGS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with H2O Retailing and SHOPRITE HDGS
The main advantage of trading using opposite H2O Retailing and SHOPRITE HDGS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if H2O Retailing position performs unexpectedly, SHOPRITE HDGS 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 HDGS will offset losses from the drop in SHOPRITE HDGS's long position.| H2O Retailing vs. Gladstone Investment | H2O Retailing vs. PURETECH HEALTH PLC | H2O Retailing vs. Planet Fitness | H2O Retailing vs. Virtus Investment Partners |
| SHOPRITE HDGS vs. United Natural Foods | SHOPRITE HDGS vs. Transport International Holdings | SHOPRITE HDGS vs. Yuexiu Transport Infrastructure | SHOPRITE HDGS vs. MTY Food Group |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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