Correlation Between RB Food and CENTRAL RETAIL

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

By analyzing existing cross correlation between RB Food Supply and CENTRAL RETAIL P, you can compare the effects of market volatilities on RB Food and CENTRAL RETAIL 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 RB Food with a short position of CENTRAL RETAIL. Check out your portfolio center. Please also check ongoing floating volatility patterns of RB Food and CENTRAL RETAIL.

Diversification Opportunities for RB Food and CENTRAL RETAIL

-0.09

Correlation Coefficient

RB Food  CENTRAL RETAIL

Good diversification

The 3 months correlation between RBF and CENTRAL is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding RB Food Supply and CENTRAL RETAIL P in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CENTRAL RETAIL P and RB Food 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 RB Food Supply are associated (or correlated) with CENTRAL RETAIL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CENTRAL RETAIL P has no effect on the direction of RB Food i.e., RB Food and CENTRAL RETAIL go up and down completely randomly.

Pair Corralation between RB Food and CENTRAL RETAIL

Assuming the 90 days trading horizon RB Food Supply is expected to generate 1.88 times more return on investment than CENTRAL RETAIL. However, RB Food is 1.88 times more volatile than CENTRAL RETAIL P. It trades about 0.01 of its potential returns per unit of risk. CENTRAL RETAIL P is currently generating about -0.13 per unit of risk. If you would invest  650.00  in RB Food Supply on September 24, 2024 and sell it today you would lose (5.00) from holding RB Food Supply or give up 0.77% of portfolio value over 90 days.

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

RB Food Supply  vs.  CENTRAL RETAIL P

RB Food Supply

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days RB Food Supply has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent technical and fundamental indicators, RB Food is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

CENTRAL RETAIL P

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CENTRAL RETAIL P has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's fundamental drivers 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 RB Food and CENTRAL RETAIL

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

The idea behind RB Food Supply and CENTRAL RETAIL P 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.