Correlation Between Sligro Food and Flow Traders

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

Diversification Opportunities for Sligro Food and Flow Traders

0.66

Correlation Coefficient

Sligro Food  Flow Traders

Poor diversification

The 3 months correlation between Sligro and Flow is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Sligro Food Group and Flow Traders BV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Flow Traders BV 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 Flow Traders. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Flow Traders BV has no effect on the direction of Sligro Food i.e., Sligro Food and Flow Traders go up and down completely randomly.

Pair Corralation between Sligro Food and Flow Traders

Assuming the 90 days trading horizon Sligro Food is expected to generate 3.35 times less return on investment than Flow Traders. But when comparing it to its historical volatility, Sligro Food Group is 1.52 times less risky than Flow Traders. It trades about 0.05 of its potential returns per unit of risk. Flow Traders BV is currently generating about 0.11 of returns per unit of risk over similar time horizon. 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

Sligro Food Group  vs.  Flow Traders BV

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.

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.

Pair Trading with Sligro Food and Flow Traders

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

The idea behind Sligro Food Group and Flow Traders BV 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.