Correlation Between M Food and E Shopping
Can any of the company-specific risk be diversified away by investing in both M Food and E Shopping 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 M Food and E Shopping into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between M Food SA and E shopping Group SA, you can compare the effects of market volatilities on M Food and E Shopping 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 M Food with a short position of E Shopping. Check out your portfolio center. Please also check ongoing floating volatility patterns of M Food and E Shopping.
Diversification Opportunities for M Food and E Shopping
-0.48 | Correlation Coefficient |
Very good diversification
The 3 months correlation between MFD and ESG is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding M Food SA and E shopping Group SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on E shopping Group and M Food 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 M Food SA are associated (or correlated) with E Shopping. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of E shopping Group has no effect on the direction of M Food i.e., M Food and E Shopping go up and down completely randomly.
Pair Corralation between M Food and E Shopping
Assuming the 90 days trading horizon M Food SA is expected to under-perform the E Shopping. But the stock apears to be less risky and, when comparing its historical volatility, M Food SA is 1.65 times less risky than E Shopping. The stock trades about -0.14 of its potential returns per unit of risk. The E shopping Group SA is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest 172.00 in E shopping Group SA on October 17, 2024 and sell it today you would lose (73.00) from holding E shopping Group SA or give up 42.44% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 72.73% |
| Values | Daily Returns |
M Food SA vs. E shopping Group SA
Performance |
| Timeline |
| M Food SA |
| E shopping Group |
M Food and E Shopping Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with M Food and E Shopping
The main advantage of trading using opposite M Food and E Shopping positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if M Food position performs unexpectedly, E Shopping 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 E Shopping will offset losses from the drop in E Shopping's long position.| M Food vs. Inter Cars SA | M Food vs. X Trade Brokers | M Food vs. Mlk Foods Public | M Food vs. Globe Trade Centre |
| E Shopping vs. MW Trade SA | E Shopping vs. M Food SA | E Shopping vs. Play2Chill SA | E Shopping vs. PLAYWAY SA |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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