Correlation Between Palantir Technologies and Shoprite Holdings

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Can any of the company-specific risk be diversified away by investing in both Palantir Technologies 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 Palantir Technologies and Shoprite Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Palantir Technologies Class and Shoprite Holdings Limited, you can compare the effects of market volatilities on Palantir Technologies 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 Palantir Technologies with a short position of Shoprite Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Palantir Technologies and Shoprite Holdings.

Diversification Opportunities for Palantir Technologies and Shoprite Holdings

0.83
  Correlation Coefficient

Very poor diversification

The 3 months correlation between Palantir and Shoprite is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Palantir Technologies Class and Shoprite Holdings Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shoprite Holdings and Palantir Technologies 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 Palantir Technologies Class 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 Palantir Technologies i.e., Palantir Technologies and Shoprite Holdings go up and down completely randomly.

Pair Corralation between Palantir Technologies and Shoprite Holdings

If you would invest  4,493  in Palantir Technologies Class on August 30, 2024 and sell it today you would earn a total of  2,081  from holding Palantir Technologies Class or generate 46.32% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy4.55%
ValuesDaily Returns

Palantir Technologies Class  vs.  Shoprite Holdings Limited

 Performance 
       Timeline  
Palantir Technologies 

Risk-Adjusted Performance

22 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Palantir Technologies Class are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. Even with relatively abnormal basic indicators, Palantir Technologies reported solid returns over the last few months and may actually be approaching a breakup point.
Shoprite Holdings 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
OK
Over the last 90 days Shoprite Holdings Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly unsteady technical and fundamental indicators, Shoprite Holdings may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Palantir Technologies and Shoprite Holdings Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Palantir Technologies and Shoprite Holdings

The main advantage of trading using opposite Palantir Technologies and Shoprite Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Palantir Technologies 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.
The idea behind Palantir Technologies Class and Shoprite Holdings Limited pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.

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