Correlation Between NH Foods and Shoprite Holdings
Can any of the company-specific risk be diversified away by investing in both NH Foods 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 NH Foods and Shoprite Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NH Foods Ltd and Shoprite Holdings Limited, you can compare the effects of market volatilities on NH Foods 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 NH Foods with a short position of Shoprite Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of NH Foods and Shoprite Holdings.
Diversification Opportunities for NH Foods and Shoprite Holdings
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between NIPMY and Shoprite is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding NH Foods Ltd and Shoprite Holdings Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shoprite Holdings and NH Foods 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 NH Foods Ltd 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 NH Foods i.e., NH Foods and Shoprite Holdings go up and down completely randomly.
Pair Corralation between NH Foods and Shoprite Holdings
Assuming the 90 days horizon NH Foods is expected to generate 5.57 times less return on investment than Shoprite Holdings. But when comparing it to its historical volatility, NH Foods Ltd is 3.69 times less risky than Shoprite Holdings. It trades about 0.09 of its potential returns per unit of risk. Shoprite Holdings Limited is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 1,370 in Shoprite Holdings Limited on August 30, 2024 and sell it today you would earn a total of 263.00 from holding Shoprite Holdings Limited or generate 19.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 72.22% |
| Values | Daily Returns |
NH Foods Ltd vs. Shoprite Holdings Limited
Performance |
| Timeline |
| NH Foods |
| Shoprite Holdings |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
OK
NH Foods and Shoprite Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NH Foods and Shoprite Holdings
The main advantage of trading using opposite NH Foods and Shoprite Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NH Foods 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.| NH Foods vs. Darling Ingredients | NH Foods vs. Paranovus Entertainment Technology | NH Foods vs. ABIVAX Socit Anonyme | NH Foods vs. Pinnacle Sherman Multi Strategy |
| Shoprite Holdings vs. Boston Omaha Corp | Shoprite Holdings vs. Organic Sales and | Shoprite Holdings vs. Entravision Communications | Shoprite Holdings vs. Marchex |
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 Stocks Directory module to find actively traded stocks across global markets.
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