Correlation Between Sligro Food and Four Seasons

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

By analyzing existing cross correlation between Sligro Food Group and Four Seasons Education, you can compare the effects of market volatilities on Sligro Food and Four Seasons 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 Sligro Food with a short position of Four Seasons. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sligro Food and Four Seasons.

Diversification Opportunities for Sligro Food and Four Seasons

0.74

Correlation Coefficient

Sligro Food  Four Seasons

Poor diversification

The 3 months correlation between Sligro and Four is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Sligro Food Group and Four Seasons Education in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Four Seasons Education and Sligro 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 Sligro Food Group are associated (or correlated) with Four Seasons. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Four Seasons Education has no effect on the direction of Sligro Food i.e., Sligro Food and Four Seasons go up and down completely randomly.

Pair Corralation between Sligro Food and Four Seasons

Assuming the 90 days horizon Sligro Food Group is expected to under-perform the Four Seasons. But the pink sheet apears to be less risky and, when comparing its historical volatility, Sligro Food Group is 38.97 times less risky than Four Seasons. The pink sheet trades about -0.09 of its potential returns per unit of risk. The Four Seasons Education is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  869.00  in Four Seasons Education on September 27, 2024 and sell it today you would earn a total of  132.00  from holding Four Seasons Education or generate 15.19% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	94.05%
Values	Daily Returns

Sligro Food Group  vs.  Four Seasons Education

Sligro Food Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sligro Food Group 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.

Four Seasons Education

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Four Seasons Education has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's fundamental indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Sligro Food and Four Seasons

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

The idea behind Sligro Food Group and Four Seasons Education 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.