Correlation Between SA Corporate and RCL Foods
Can any of the company-specific risk be diversified away by investing in both SA Corporate and RCL 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 SA Corporate and RCL Foods into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SA Corporate Real and RCL Foods, you can compare the effects of market volatilities on SA Corporate and RCL 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 SA Corporate with a short position of RCL Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of SA Corporate and RCL Foods.
Diversification Opportunities for SA Corporate and RCL Foods
-0.7 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between SAC and RCL is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding SA Corporate Real and RCL Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RCL Foods and SA Corporate 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 SA Corporate Real are associated (or correlated) with RCL Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RCL Foods has no effect on the direction of SA Corporate i.e., SA Corporate and RCL Foods go up and down completely randomly.
Pair Corralation between SA Corporate and RCL Foods
Assuming the 90 days trading horizon SA Corporate Real is expected to under-perform the RCL Foods. In addition to that, SA Corporate is 1.69 times more volatile than RCL Foods. It trades about -0.02 of its total potential returns per unit of risk. RCL Foods is currently generating about 0.01 per unit of volatility. If you would invest 91,000 in RCL Foods on August 27, 2024 and sell it today you would earn a total of 100.00 from holding RCL Foods or generate 0.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SA Corporate Real vs. RCL Foods
Performance |
| Timeline |
| SA Corporate Real |
| RCL Foods |
SA Corporate and RCL Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SA Corporate and RCL Foods
The main advantage of trading using opposite SA Corporate and RCL Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SA Corporate position performs unexpectedly, RCL 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 RCL Foods will offset losses from the drop in RCL Foods' long position.| SA Corporate vs. Astral Foods | SA Corporate vs. Copper 360 | SA Corporate vs. Brimstone Investment | SA Corporate vs. Master Drilling Group |
| RCL Foods vs. Standard Bank Group | RCL Foods vs. Ascendis Health | RCL Foods vs. City Lodge Hotels | RCL Foods vs. Advtech |
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 Valuation module to check real value of public entities based on technical and fundamental data.
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