Correlation Between China Foods and Sligro Food

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

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

Diversification Opportunities for China Foods and Sligro Food

-0.57

Correlation Coefficient

China Foods  Sligro Food

Excellent diversification

The 3 months correlation between China and Sligro is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding China Foods Limited 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 China Foods 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 China Foods Limited 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 China Foods i.e., China Foods and Sligro Food go up and down completely randomly.

Pair Corralation between China Foods and Sligro Food

Assuming the 90 days horizon China Foods Limited is expected to generate 1.62 times more return on investment than Sligro Food. However, China Foods is 1.62 times more volatile than Sligro Food Group. It trades about 0.04 of its potential returns per unit of risk. Sligro Food Group is currently generating about -0.04 per unit of risk. If you would invest  33.00  in China Foods Limited on May 7, 2025 and sell it today you would earn a total of  2.00  from holding China Foods Limited or generate 6.06% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

China Foods Limited  vs.  Sligro Food Group

China Foods Limited

Risk-Adjusted Performance

Soft

Compared to the overall equity markets, risk-adjusted returns on investments in China Foods Limited are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, China Foods may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Sligro Food Group

Risk-Adjusted Performance

Weakest

Over the last 90 days Sligro Food Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Sligro Food is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with China Foods and Sligro Food

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

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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.