Correlation Between TKH Group and Sligro Food

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

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

Diversification Opportunities for TKH Group and Sligro Food

0.79

Correlation Coefficient

TKH Group  Sligro Food

Poor diversification

The 3 months correlation between TKH and Sligro is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding TKH Group NV and Sligro Food Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sligro Food Group and TKH Group 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 TKH Group NV are associated (or correlated) with Sligro Food. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sligro Food Group has no effect on the direction of TKH Group i.e., TKH Group and Sligro Food go up and down completely randomly.

Pair Corralation between TKH Group and Sligro Food

Assuming the 90 days trading horizon TKH Group NV is expected to under-perform the Sligro Food. In addition to that, TKH Group is 2.59 times more volatile than Sligro Food Group. It trades about -0.29 of its total potential returns per unit of risk. Sligro Food Group is currently generating about -0.26 per unit of volatility. If you would invest  1,134  in Sligro Food Group on September 5, 2024 and sell it today you would lose (62.00) from holding Sligro Food Group or give up 5.47% of portfolio value over 90 days.

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

TKH Group NV  vs.  Sligro Food Group

TKH Group NV

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days TKH Group NV has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

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 weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with TKH Group and Sligro Food

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

The idea behind TKH Group NV and Sligro Food Group 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.