Correlation Between Samfine Creation and Grocery Outlet

Can any of the company-specific risk be diversified away by investing in both Samfine Creation and Grocery Outlet 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 Samfine Creation and Grocery Outlet into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Samfine Creation Holdings and Grocery Outlet Holding, you can compare the effects of market volatilities on Samfine Creation and Grocery Outlet 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 Samfine Creation with a short position of Grocery Outlet. Check out your portfolio center. Please also check ongoing floating volatility patterns of Samfine Creation and Grocery Outlet.

Diversification Opportunities for Samfine Creation and Grocery Outlet

0.46

Correlation Coefficient

Samfine Creation  Grocery Outlet

Very weak diversification

The 3 months correlation between Samfine and Grocery is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Samfine Creation Holdings and Grocery Outlet Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grocery Outlet Holding and Samfine Creation 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 Samfine Creation Holdings are associated (or correlated) with Grocery Outlet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grocery Outlet Holding has no effect on the direction of Samfine Creation i.e., Samfine Creation and Grocery Outlet go up and down completely randomly.

Pair Corralation between Samfine Creation and Grocery Outlet

Given the investment horizon of 90 days Samfine Creation is expected to generate 1.14 times less return on investment than Grocery Outlet. In addition to that, Samfine Creation is 5.24 times more volatile than Grocery Outlet Holding. It trades about 0.01 of its total potential returns per unit of risk. Grocery Outlet Holding is currently generating about 0.07 per unit of volatility. If you would invest  1,683  in Grocery Outlet Holding on September 17, 2024 and sell it today you would earn a total of  228.00  from holding Grocery Outlet Holding or generate 13.55% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	67.69%
Values	Daily Returns

Samfine Creation Holdings  vs.  Grocery Outlet Holding

Samfine Creation Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Samfine Creation Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly unsteady technical indicators, Samfine Creation reported solid returns over the last few months and may actually be approaching a breakup point.

Grocery Outlet Holding

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Grocery Outlet Holding are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain basic indicators, Grocery Outlet displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Samfine Creation and Grocery Outlet

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

The idea behind Samfine Creation Holdings and Grocery Outlet Holding 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.