Correlation Between RCL Foods and Village Super

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

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

Diversification Opportunities for RCL Foods and Village Super

0.23

Correlation Coefficient

RCL Foods  Village Super

Modest diversification

The 3 months correlation between RCL and Village is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding RCL Foods Limited and Village Super Market in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Village Super Market and RCL 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 RCL Foods Limited are associated (or correlated) with Village Super. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Village Super Market has no effect on the direction of RCL Foods i.e., RCL Foods and Village Super go up and down completely randomly.

Pair Corralation between RCL Foods and Village Super

Assuming the 90 days horizon RCL Foods is expected to generate 1.73 times less return on investment than Village Super. But when comparing it to its historical volatility, RCL Foods Limited is 2.87 times less risky than Village Super. It trades about 0.22 of its potential returns per unit of risk. Village Super Market is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  3,539  in Village Super Market on February 15, 2025 and sell it today you would earn a total of  135.00  from holding Village Super Market or generate 3.81% return on investment over 90 days.

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

RCL Foods Limited  vs.  Village Super Market

RCL Foods Limited

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in RCL Foods Limited are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable technical and fundamental indicators, RCL Foods is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Village Super Market

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Village Super Market are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain technical and fundamental indicators, Village Super may actually be approaching a critical reversion point that can send shares even higher in June 2025.

Pair Trading with RCL Foods and Village Super

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

The idea behind RCL Foods Limited and Village Super Market 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.