Correlation Between Shoprite Holdings and Relx PLC
Can any of the company-specific risk be diversified away by investing in both Shoprite Holdings and Relx PLC 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 Shoprite Holdings and Relx PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Shoprite Holdings Limited and Relx PLC ADR, you can compare the effects of market volatilities on Shoprite Holdings and Relx PLC 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 Shoprite Holdings with a short position of Relx PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shoprite Holdings and Relx PLC.
Diversification Opportunities for Shoprite Holdings and Relx PLC
-0.11 | Correlation Coefficient |
Good diversification
The 3 months correlation between Shoprite and Relx is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Shoprite Holdings Limited and Relx PLC ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Relx PLC ADR and Shoprite Holdings 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 Shoprite Holdings Limited are associated (or correlated) with Relx PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Relx PLC ADR has no effect on the direction of Shoprite Holdings i.e., Shoprite Holdings and Relx PLC go up and down completely randomly.
Pair Corralation between Shoprite Holdings and Relx PLC
Assuming the 90 days horizon Shoprite Holdings Limited is expected to generate 0.42 times more return on investment than Relx PLC. However, Shoprite Holdings Limited is 2.37 times less risky than Relx PLC. It trades about 0.28 of its potential returns per unit of risk. Relx PLC ADR is currently generating about -0.09 per unit of risk. If you would invest 1,607 in Shoprite Holdings Limited on September 24, 2024 and sell it today you would earn a total of 26.00 from holding Shoprite Holdings Limited or generate 1.62% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 20.31% |
Values | Daily Returns |
Shoprite Holdings Limited vs. Relx PLC ADR
Performance |
Timeline |
Shoprite Holdings |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Solid
Relx PLC ADR |
Shoprite Holdings and Relx PLC Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Shoprite Holdings and Relx PLC
The main advantage of trading using opposite Shoprite Holdings and Relx PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shoprite Holdings position performs unexpectedly, Relx PLC 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 Relx PLC will offset losses from the drop in Relx PLC's long position.Shoprite Holdings vs. Relx PLC ADR | Shoprite Holdings vs. Zane Interactive Publishing | Shoprite Holdings vs. Harmony Gold Mining | Shoprite Holdings vs. Vindicator Silver Lead Mining |
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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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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