Correlation Between Shoprite Holdings and Remgro
Can any of the company-specific risk be diversified away by investing in both Shoprite Holdings and Remgro 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 Remgro into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Shoprite Holdings and Remgro, you can compare the effects of market volatilities on Shoprite Holdings and Remgro 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 Remgro. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shoprite Holdings and Remgro.
Diversification Opportunities for Shoprite Holdings and Remgro
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Shoprite and Remgro is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Shoprite Holdings and Remgro in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Remgro 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 Remgro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Remgro has no effect on the direction of Shoprite Holdings i.e., Shoprite Holdings and Remgro go up and down completely randomly.
Pair Corralation between Shoprite Holdings and Remgro
Assuming the 90 days trading horizon Shoprite Holdings is expected to generate 1.37 times more return on investment than Remgro. However, Shoprite Holdings is 1.37 times more volatile than Remgro. It trades about -0.06 of its potential returns per unit of risk. Remgro is currently generating about -0.12 per unit of risk. If you would invest 3,030,700 in Shoprite Holdings on August 31, 2024 and sell it today you would lose (52,000) from holding Shoprite Holdings or give up 1.72% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Shoprite Holdings vs. Remgro
Performance |
| Timeline |
| Shoprite Holdings |
| Remgro |
Shoprite Holdings and Remgro Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shoprite Holdings and Remgro
The main advantage of trading using opposite Shoprite Holdings and Remgro positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shoprite Holdings position performs unexpectedly, Remgro 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 Remgro will offset losses from the drop in Remgro's long position.| Shoprite Holdings vs. Harmony Gold Mining | Shoprite Holdings vs. Deneb Investments | Shoprite Holdings vs. City Lodge Hotels | Shoprite Holdings vs. Zeder Investments |
| Remgro vs. Copper 360 | Remgro vs. Zeder Investments | Remgro vs. Trematon Capital Investments | Remgro 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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