Correlation Between Kroger and SCOR PK

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

By analyzing existing cross correlation between Kroger Company and SCOR PK, you can compare the effects of market volatilities on Kroger and SCOR PK 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 Kroger with a short position of SCOR PK. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kroger and SCOR PK.

Diversification Opportunities for Kroger and SCOR PK

0.76

Correlation Coefficient

Kroger  SCOR PK

Poor diversification

The 3 months correlation between Kroger and SCOR is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Kroger Company and SCOR PK in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SCOR PK and Kroger 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 Kroger Company are associated (or correlated) with SCOR PK. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SCOR PK has no effect on the direction of Kroger i.e., Kroger and SCOR PK go up and down completely randomly.

Pair Corralation between Kroger and SCOR PK

Allowing for the 90-day total investment horizon Kroger Company is expected to generate 0.55 times more return on investment than SCOR PK. However, Kroger Company is 1.81 times less risky than SCOR PK. It trades about -0.1 of its potential returns per unit of risk. SCOR PK is currently generating about -0.06 per unit of risk. If you would invest  5,713  in Kroger Company on January 28, 2024 and sell it today you would lose (164.00) from holding Kroger Company or give up 2.87% of portfolio value over 90 days.

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

Kroger Company  vs.  SCOR PK

Kroger Company

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Kroger Company are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Even with relatively unfluctuating basic indicators, Kroger reported solid returns over the last few months and may actually be approaching a breakup point.

SCOR PK

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in SCOR PK are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady basic indicators, SCOR PK may actually be approaching a critical reversion point that can send shares even higher in May 2024.

Pair Trading with Kroger and SCOR PK

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

The idea behind Kroger Company and SCOR PK 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.