Correlation Between Flow Traders and Sligro Food

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

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

Diversification Opportunities for Flow Traders and Sligro Food

0.66

Correlation Coefficient

Flow Traders  Sligro Food

Poor diversification

The 3 months correlation between Flow and Sligro is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Flow Traders BV 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 Flow Traders 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 Flow Traders BV 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 Flow Traders i.e., Flow Traders and Sligro Food go up and down completely randomly.

Pair Corralation between Flow Traders and Sligro Food

Assuming the 90 days trading horizon Flow Traders BV is expected to generate 1.52 times more return on investment than Sligro Food. However, Flow Traders is 1.52 times more volatile than Sligro Food Group. It trades about 0.11 of its potential returns per unit of risk. Sligro Food Group is currently generating about 0.05 per unit of risk. If you would invest  1,778  in Flow Traders BV on March 14, 2024 and sell it today you would earn a total of  173.00  from holding Flow Traders BV or generate 9.73% return on investment over 90 days.

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

Flow Traders BV  vs.  Sligro Food Group

Flow Traders BV

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Flow Traders BV are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Flow Traders may actually be approaching a critical reversion point that can send shares even higher in July 2024.

Sligro Food Group

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Sligro Food Group are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Sligro Food is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Flow Traders and Sligro Food

The main advantage of trading using opposite Flow Traders and Sligro Food positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Flow Traders 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 Flow Traders BV 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.