Correlation Between Wolters Kluwer and Sligro Food

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

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

Diversification Opportunities for Wolters Kluwer and Sligro Food

-0.55

Correlation Coefficient

Wolters Kluwer  Sligro Food

Excellent diversification

The 3 months correlation between Wolters and Sligro is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Wolters Kluwer 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 Wolters Kluwer 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 Wolters Kluwer 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 Wolters Kluwer i.e., Wolters Kluwer and Sligro Food go up and down completely randomly.

Pair Corralation between Wolters Kluwer and Sligro Food

Assuming the 90 days trading horizon Wolters Kluwer is expected to generate 1.02 times less return on investment than Sligro Food. But when comparing it to its historical volatility, Wolters Kluwer NV is 1.37 times less risky than Sligro Food. It trades about 0.1 of its potential returns per unit of risk. Sligro Food Group is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  1,068  in Sligro Food Group on September 24, 2024 and sell it today you would earn a total of  18.00  from holding Sligro Food Group or generate 1.69% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	95.45%
Values	Daily Returns

Wolters Kluwer NV  vs.  Sligro Food Group

Wolters Kluwer NV

Risk-Adjusted Performance

2 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Wolters Kluwer NV are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable essential indicators, Wolters Kluwer is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private 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 latest uncertain performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Wolters Kluwer and Sligro Food

The main advantage of trading using opposite Wolters Kluwer and Sligro Food positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wolters Kluwer 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 Wolters Kluwer 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.