Correlation Between CVC Capital and Sligro Food

Can any of the company-specific risk be diversified away by investing in both CVC Capital and Sligro Food 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 CVC Capital and Sligro Food into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between CVC Capital Partners and Sligro Food Group, you can compare the effects of market volatilities on CVC Capital and Sligro Food 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 CVC Capital with a short position of Sligro Food. Check out your portfolio center. Please also check ongoing floating volatility patterns of CVC Capital and Sligro Food.

Diversification Opportunities for CVC Capital and Sligro Food

-0.8

Correlation Coefficient

CVC Capital  Sligro Food

Pay attention - limited upside

The 3 months correlation between CVC and Sligro is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding CVC Capital Partners and Sligro Food Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sligro Food Group and CVC Capital 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 CVC Capital Partners are associated (or correlated) with Sligro Food. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sligro Food Group has no effect on the direction of CVC Capital i.e., CVC Capital and Sligro Food go up and down completely randomly.

Pair Corralation between CVC Capital and Sligro Food

Assuming the 90 days trading horizon CVC Capital Partners is expected to generate 1.28 times more return on investment than Sligro Food. However, CVC Capital is 1.28 times more volatile than Sligro Food Group. It trades about 0.11 of its potential returns per unit of risk. Sligro Food Group is currently generating about -0.05 per unit of risk. If you would invest  1,635  in CVC Capital Partners on September 19, 2024 and sell it today you would earn a total of  545.00  from holding CVC Capital Partners or generate 33.33% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	33.27%
Values	Daily Returns

CVC Capital Partners  vs.  Sligro Food Group

CVC Capital Partners

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in CVC Capital Partners are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain fundamental indicators, CVC Capital may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Sligro Food Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sligro Food Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with CVC Capital and Sligro Food

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

The idea behind CVC Capital Partners and Sligro Food Group 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.