Correlation Between PEPKOR and Shoprite Holdings
Can any of the company-specific risk be diversified away by investing in both PEPKOR and Shoprite 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 PEPKOR and Shoprite Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PEPKOR LTD and Shoprite Holdings Limited, you can compare the effects of market volatilities on PEPKOR and Shoprite 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 PEPKOR with a short position of Shoprite Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of PEPKOR and Shoprite Holdings.
Diversification Opportunities for PEPKOR and Shoprite Holdings
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between PEPKOR and Shoprite is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding PEPKOR LTD and Shoprite Holdings Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shoprite Holdings and PEPKOR 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 PEPKOR LTD are associated (or correlated) with Shoprite Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shoprite Holdings has no effect on the direction of PEPKOR i.e., PEPKOR and Shoprite Holdings go up and down completely randomly.
Pair Corralation between PEPKOR and Shoprite Holdings
Assuming the 90 days trading horizon PEPKOR is expected to generate 1.23 times less return on investment than Shoprite Holdings. But when comparing it to its historical volatility, PEPKOR LTD is 1.92 times less risky than Shoprite Holdings. It trades about 0.21 of its potential returns per unit of risk. Shoprite Holdings Limited is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 1,096 in Shoprite Holdings Limited on September 23, 2024 and sell it today you would earn a total of 464.00 from holding Shoprite Holdings Limited or generate 42.34% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
PEPKOR LTD vs. Shoprite Holdings Limited
Performance |
Timeline |
PEPKOR LTD |
Shoprite Holdings |
PEPKOR and Shoprite Holdings Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with PEPKOR and Shoprite Holdings
The main advantage of trading using opposite PEPKOR and Shoprite Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PEPKOR position performs unexpectedly, Shoprite 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 Shoprite Holdings will offset losses from the drop in Shoprite Holdings' long position.PEPKOR vs. Aeon Co | PEPKOR vs. SHOPRITE HDGS ADR | PEPKOR vs. Shoprite Holdings Limited | PEPKOR vs. Dillards |
Shoprite Holdings vs. Aeon Co | Shoprite Holdings vs. SHOPRITE HDGS ADR | Shoprite Holdings vs. Dillards | Shoprite Holdings vs. Macys Inc |
Check out your portfolio center.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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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