Correlation Between Master Drilling and Shoprite Holdings
Can any of the company-specific risk be diversified away by investing in both Master Drilling 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 Master Drilling and Shoprite Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Master Drilling Group and Shoprite Holdings, you can compare the effects of market volatilities on Master Drilling 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 Master Drilling with a short position of Shoprite Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Master Drilling and Shoprite Holdings.
Diversification Opportunities for Master Drilling and Shoprite Holdings
-0.07 | Correlation Coefficient |
Good diversification
The 3 months correlation between Master and Shoprite is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Master Drilling Group and Shoprite Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shoprite Holdings and Master Drilling 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 Master Drilling Group 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 Master Drilling i.e., Master Drilling and Shoprite Holdings go up and down completely randomly.
Pair Corralation between Master Drilling and Shoprite Holdings
Assuming the 90 days trading horizon Master Drilling Group is expected to generate 1.32 times more return on investment than Shoprite Holdings. However, Master Drilling is 1.32 times more volatile than Shoprite Holdings. It trades about 0.09 of its potential returns per unit of risk. Shoprite Holdings is currently generating about -0.08 per unit of risk. If you would invest 133,000 in Master Drilling Group on September 1, 2024 and sell it today you would earn a total of 4,000 from holding Master Drilling Group or generate 3.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Master Drilling Group vs. Shoprite Holdings
Performance |
| Timeline |
| Master Drilling Group |
| Shoprite Holdings |
Master Drilling and Shoprite Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Master Drilling and Shoprite Holdings
The main advantage of trading using opposite Master Drilling and Shoprite Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Master Drilling 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.| Master Drilling vs. Harmony Gold Mining | Master Drilling vs. ABSA Bank Limited | Master Drilling vs. Deneb Investments | Master Drilling vs. Reinet Investments SCA |
| Shoprite Holdings vs. CA Sales Holdings | Shoprite Holdings vs. Afine Investments | Shoprite Holdings vs. We Buy Cars | Shoprite Holdings vs. Allied Electronics |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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