Correlation Between Parkson Retail and Shoprite Holdings
Can any of the company-specific risk be diversified away by investing in both Parkson Retail 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 Parkson Retail and Shoprite Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Parkson Retail Group and Shoprite Holdings Limited, you can compare the effects of market volatilities on Parkson Retail 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 Parkson Retail with a short position of Shoprite Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Parkson Retail and Shoprite Holdings.
Diversification Opportunities for Parkson Retail and Shoprite Holdings
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Parkson and Shoprite is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Parkson Retail Group and Shoprite Holdings Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shoprite Holdings and Parkson Retail 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 Parkson Retail 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 Parkson Retail i.e., Parkson Retail and Shoprite Holdings go up and down completely randomly.
Pair Corralation between Parkson Retail and Shoprite Holdings
Assuming the 90 days trading horizon Parkson Retail Group is expected to under-perform the Shoprite Holdings. In addition to that, Parkson Retail is 6.58 times more volatile than Shoprite Holdings Limited. It trades about -0.03 of its total potential returns per unit of risk. Shoprite Holdings Limited is currently generating about -0.01 per unit of volatility. If you would invest 1,560 in Shoprite Holdings Limited on September 1, 2024 and sell it today you would lose (10.00) from holding Shoprite Holdings Limited or give up 0.64% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Parkson Retail Group vs. Shoprite Holdings Limited
Performance |
| Timeline |
| Parkson Retail Group |
| Shoprite Holdings |
Parkson Retail and Shoprite Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Parkson Retail and Shoprite Holdings
The main advantage of trading using opposite Parkson Retail and Shoprite Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Parkson Retail 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.| Parkson Retail vs. Dillards | Parkson Retail vs. RYOHIN UNSPADR1 | Parkson Retail vs. Superior Plus Corp | Parkson Retail vs. NMI Holdings |
| Shoprite Holdings vs. AIR PRODCHEMICALS | Shoprite Holdings vs. PTT Global Chemical | Shoprite Holdings vs. Silicon Motion Technology | Shoprite Holdings vs. BRIT AMER TOBACCO |
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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