Correlation Between SFS REAL and VITAFOAM NIGERIA

Can any of the company-specific risk be diversified away by investing in both SFS REAL and VITAFOAM NIGERIA 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 SFS REAL and VITAFOAM NIGERIA into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between SFS REAL ESTATE and VITAFOAM NIGERIA PLC, you can compare the effects of market volatilities on SFS REAL and VITAFOAM NIGERIA 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 SFS REAL with a short position of VITAFOAM NIGERIA. Check out your portfolio center. Please also check ongoing floating volatility patterns of SFS REAL and VITAFOAM NIGERIA.

Diversification Opportunities for SFS REAL and VITAFOAM NIGERIA

0.86

Correlation Coefficient

SFS REAL  VITAFOAM NIGERIA

Very poor diversification

The 3 months correlation between SFS and VITAFOAM is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding SFS REAL ESTATE and VITAFOAM NIGERIA PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VITAFOAM NIGERIA PLC and SFS REAL 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 SFS REAL ESTATE are associated (or correlated) with VITAFOAM NIGERIA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VITAFOAM NIGERIA PLC has no effect on the direction of SFS REAL i.e., SFS REAL and VITAFOAM NIGERIA go up and down completely randomly.

Pair Corralation between SFS REAL and VITAFOAM NIGERIA

Assuming the 90 days trading horizon SFS REAL is expected to generate 4.09 times less return on investment than VITAFOAM NIGERIA. But when comparing it to its historical volatility, SFS REAL ESTATE is 2.21 times less risky than VITAFOAM NIGERIA. It trades about 0.19 of its potential returns per unit of risk. VITAFOAM NIGERIA PLC is currently generating about 0.34 of returns per unit of risk over similar time horizon. If you would invest  4,080  in VITAFOAM NIGERIA PLC on April 24, 2025 and sell it today you would earn a total of  4,705  from holding VITAFOAM NIGERIA PLC or generate 115.32% return on investment over 90 days.

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

SFS REAL ESTATE  vs.  VITAFOAM NIGERIA PLC

SFS REAL ESTATE

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in SFS REAL ESTATE are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak forward indicators, SFS REAL unveiled solid returns over the last few months and may actually be approaching a breakup point.

VITAFOAM NIGERIA PLC

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in VITAFOAM NIGERIA PLC are ranked lower than 27 (%) of all global equities and portfolios over the last 90 days. Despite somewhat inconsistent basic indicators, VITAFOAM NIGERIA sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SFS REAL and VITAFOAM NIGERIA

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

The idea behind SFS REAL ESTATE and VITAFOAM NIGERIA PLC 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.