Correlation Between Fresh Del and SGS SA

Can any of the company-specific risk be diversified away by investing in both Fresh Del and SGS SA 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 Fresh Del and SGS SA into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Fresh Del Monte and SGS SA, you can compare the effects of market volatilities on Fresh Del and SGS SA 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 Fresh Del with a short position of SGS SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fresh Del and SGS SA.

Diversification Opportunities for Fresh Del and SGS SA

-0.83

Correlation Coefficient

Fresh Del  SGS SA

Pay attention - limited upside

The 3 months correlation between Fresh and SGS is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding Fresh Del Monte and SGS SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SGS SA and Fresh Del 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 Fresh Del Monte are associated (or correlated) with SGS SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SGS SA has no effect on the direction of Fresh Del i.e., Fresh Del and SGS SA go up and down completely randomly.

Pair Corralation between Fresh Del and SGS SA

Considering the 90-day investment horizon Fresh Del Monte is expected to generate 0.66 times more return on investment than SGS SA. However, Fresh Del Monte is 1.51 times less risky than SGS SA. It trades about 0.14 of its potential returns per unit of risk. SGS SA is currently generating about -0.06 per unit of risk. If you would invest  2,933  in Fresh Del Monte on September 18, 2024 and sell it today you would earn a total of  473.00  from holding Fresh Del Monte or generate 16.13% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Fresh Del Monte  vs.  SGS SA

Fresh Del Monte

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Fresh Del Monte are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak fundamental indicators, Fresh Del reported solid returns over the last few months and may actually be approaching a breakup point.

SGS SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SGS SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting 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.

Pair Trading with Fresh Del and SGS SA

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

The idea behind Fresh Del Monte and SGS SA 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.