Correlation Between Superior Plus and Capri Holdings

Can any of the company-specific risk be diversified away by investing in both Superior Plus and Capri 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 Superior Plus and Capri Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Superior Plus Corp and Capri Holdings Limited, you can compare the effects of market volatilities on Superior Plus and Capri 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 Superior Plus with a short position of Capri Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Superior Plus and Capri Holdings.

Diversification Opportunities for Superior Plus and Capri Holdings

0.86

Correlation Coefficient

Superior Plus  Capri Holdings

Very poor diversification

The 3 months correlation between Superior and Capri is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Superior Plus Corp and Capri Holdings Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capri Holdings and Superior Plus 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 Superior Plus Corp are associated (or correlated) with Capri Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capri Holdings has no effect on the direction of Superior Plus i.e., Superior Plus and Capri Holdings go up and down completely randomly.

Pair Corralation between Superior Plus and Capri Holdings

Assuming the 90 days horizon Superior Plus is expected to generate 2.57 times less return on investment than Capri Holdings. But when comparing it to its historical volatility, Superior Plus Corp is 1.56 times less risky than Capri Holdings. It trades about 0.07 of its potential returns per unit of risk. Capri Holdings Limited is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  1,871  in Capri Holdings Limited on September 22, 2024 and sell it today you would earn a total of  131.00  from holding Capri Holdings Limited or generate 7.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	95.65%
Values	Daily Returns

Superior Plus Corp  vs.  Capri Holdings Limited

Superior Plus Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Superior Plus Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Capri Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Capri Holdings Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Superior Plus and Capri Holdings

The main advantage of trading using opposite Superior Plus and Capri Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Superior Plus position performs unexpectedly, Capri 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 Capri Holdings will offset losses from the drop in Capri Holdings' long position.

The idea behind Superior Plus Corp and Capri 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.

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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 Commodity Directory module to find actively traded commodities issued by global exchanges.