Correlation Between Pick N and Quantum Foods
Can any of the company-specific risk be diversified away by investing in both Pick N and Quantum Foods 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 Pick N and Quantum Foods into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pick N Pay and Quantum Foods Holdings, you can compare the effects of market volatilities on Pick N and Quantum Foods 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 Pick N with a short position of Quantum Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pick N and Quantum Foods.
Diversification Opportunities for Pick N and Quantum Foods
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Pick and Quantum is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Pick N Pay and Quantum Foods Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Quantum Foods Holdings and Pick N 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 Pick N Pay are associated (or correlated) with Quantum Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Quantum Foods Holdings has no effect on the direction of Pick N i.e., Pick N and Quantum Foods go up and down completely randomly.
Pair Corralation between Pick N and Quantum Foods
Assuming the 90 days trading horizon Pick N Pay is expected to generate 0.23 times more return on investment than Quantum Foods. However, Pick N Pay is 4.39 times less risky than Quantum Foods. It trades about 0.05 of its potential returns per unit of risk. Quantum Foods Holdings is currently generating about -0.05 per unit of risk. If you would invest 287,000 in Pick N Pay on November 25, 2024 and sell it today you would earn a total of 10,100 from holding Pick N Pay or generate 3.52% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 98.39% |
Values | Daily Returns |
Pick N Pay vs. Quantum Foods Holdings
Performance |
Timeline |
Pick N Pay |
Quantum Foods Holdings |
Pick N and Quantum Foods Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Pick N and Quantum Foods
The main advantage of trading using opposite Pick N and Quantum Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pick N position performs unexpectedly, Quantum Foods 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 Quantum Foods will offset losses from the drop in Quantum Foods' long position.Pick N vs. Woolworths Holdings | ||
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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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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