Correlation Between Sligro Food and Nike

Can any of the company-specific risk be diversified away by investing in both Sligro Food and Nike 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 Nike 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 Nike Inc, you can compare the effects of market volatilities on Sligro Food and Nike 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 Nike. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sligro Food and Nike.

Diversification Opportunities for Sligro Food and Nike

0.33

Correlation Coefficient

Sligro Food  Nike

Weak diversification

The 3 months correlation between Sligro and Nike is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Sligro Food Group and Nike Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nike Inc 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 Nike. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nike Inc has no effect on the direction of Sligro Food i.e., Sligro Food and Nike go up and down completely randomly.

Pair Corralation between Sligro Food and Nike

Assuming the 90 days horizon Sligro Food Group is expected to under-perform the Nike. But the pink sheet apears to be less risky and, when comparing its historical volatility, Sligro Food Group is 1.1 times less risky than Nike. The pink sheet trades about -0.07 of its potential returns per unit of risk. The Nike Inc is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  7,800  in Nike Inc on September 12, 2024 and sell it today you would lose (126.00) from holding Nike Inc or give up 1.62% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Sligro Food Group  vs.  Nike Inc

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 uncertain 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.

Nike Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nike Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound forward-looking signals, Nike is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Sligro Food and Nike

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

The idea behind Sligro Food Group and Nike Inc 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.