Correlation Between Shoprite Holdings and Aspen Pharmacare
Can any of the company-specific risk be diversified away by investing in both Shoprite Holdings and Aspen Pharmacare 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 Shoprite Holdings and Aspen Pharmacare into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Shoprite Holdings and Aspen Pharmacare Holdings, you can compare the effects of market volatilities on Shoprite Holdings and Aspen Pharmacare 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 Shoprite Holdings with a short position of Aspen Pharmacare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shoprite Holdings and Aspen Pharmacare.
Diversification Opportunities for Shoprite Holdings and Aspen Pharmacare
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Shoprite and Aspen is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Shoprite Holdings and Aspen Pharmacare Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aspen Pharmacare Holdings and Shoprite Holdings 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 Shoprite Holdings are associated (or correlated) with Aspen Pharmacare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aspen Pharmacare Holdings has no effect on the direction of Shoprite Holdings i.e., Shoprite Holdings and Aspen Pharmacare go up and down completely randomly.
Pair Corralation between Shoprite Holdings and Aspen Pharmacare
Assuming the 90 days trading horizon Shoprite Holdings is expected to generate 2.1 times more return on investment than Aspen Pharmacare. However, Shoprite Holdings is 2.1 times more volatile than Aspen Pharmacare Holdings. It trades about 0.1 of its potential returns per unit of risk. Aspen Pharmacare Holdings is currently generating about -0.49 per unit of risk. If you would invest 2,894,300 in Shoprite Holdings on August 28, 2024 and sell it today you would earn a total of 94,200 from holding Shoprite Holdings or generate 3.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Shoprite Holdings vs. Aspen Pharmacare Holdings
Performance |
| Timeline |
| Shoprite Holdings |
| Aspen Pharmacare Holdings |
Shoprite Holdings and Aspen Pharmacare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shoprite Holdings and Aspen Pharmacare
The main advantage of trading using opposite Shoprite Holdings and Aspen Pharmacare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shoprite Holdings position performs unexpectedly, Aspen Pharmacare 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 Aspen Pharmacare will offset losses from the drop in Aspen Pharmacare's long position.| Shoprite Holdings vs. CA Sales Holdings | Shoprite Holdings vs. Kap Industrial Holdings | Shoprite Holdings vs. Deneb Investments | Shoprite Holdings vs. City Lodge Hotels |
| Aspen Pharmacare vs. RCL Foods | Aspen Pharmacare vs. Advtech | Aspen Pharmacare vs. Allied Electronics | Aspen Pharmacare vs. British American 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 CEOs Directory module to screen CEOs from public companies around the world.
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