Correlation Between Ferguson Plc and SosTravel SPA

Can any of the company-specific risk be diversified away by investing in both Ferguson Plc and SosTravel SPA 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 Ferguson Plc and SosTravel SPA into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Ferguson Plc and SosTravel SPA, you can compare the effects of market volatilities on Ferguson Plc and SosTravel SPA 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 Ferguson Plc with a short position of SosTravel SPA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ferguson Plc and SosTravel SPA.

Diversification Opportunities for Ferguson Plc and SosTravel SPA

0.0

Correlation Coefficient

Ferguson Plc  SosTravel SPA

Pay attention - limited upside

The 3 months correlation between Ferguson and SosTravel is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Ferguson Plc and SosTravel SPA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SosTravel SPA and Ferguson Plc 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 Ferguson Plc are associated (or correlated) with SosTravel SPA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SosTravel SPA has no effect on the direction of Ferguson Plc i.e., Ferguson Plc and SosTravel SPA go up and down completely randomly.

Pair Corralation between Ferguson Plc and SosTravel SPA

If you would invest  111.00  in SosTravel SPA on September 27, 2024 and sell it today you would earn a total of  0.00  from holding SosTravel SPA or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Ferguson Plc  vs.  SosTravel SPA

Ferguson Plc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ferguson Plc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady 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.

SosTravel SPA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SosTravel SPA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, SosTravel SPA is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Ferguson Plc and SosTravel SPA

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

The idea behind Ferguson Plc and SosTravel SPA 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.