Correlation Between Absa Multi and Absa Smart

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

By analyzing existing cross correlation between Absa Multi Managed and Absa Smart Alpha, you can compare the effects of market volatilities on Absa Multi and Absa Smart 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 Absa Multi with a short position of Absa Smart. Check out your portfolio center. Please also check ongoing floating volatility patterns of Absa Multi and Absa Smart.

Diversification Opportunities for Absa Multi and Absa Smart

0.0

Correlation Coefficient

Absa Multi  Absa Smart

Pay attention - limited upside

The 3 months correlation between Absa and Absa is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Absa Multi Managed and Absa Smart Alpha in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Absa Smart Alpha and Absa Multi 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 Absa Multi Managed are associated (or correlated) with Absa Smart. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Absa Smart Alpha has no effect on the direction of Absa Multi i.e., Absa Multi and Absa Smart go up and down completely randomly.

Pair Corralation between Absa Multi and Absa Smart

If you would invest  250.00  in Absa Multi Managed on September 15, 2024 and sell it today you would earn a total of  10.00  from holding Absa Multi Managed or generate 4.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Absa Multi Managed  vs.  Absa Smart Alpha

Absa Multi Managed

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Absa Multi Managed are ranked lower than 16 (%) of all funds and portfolios of funds over the last 90 days. Despite fairly strong basic indicators, Absa Multi is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Absa Smart Alpha

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Absa Smart Alpha has generated negative risk-adjusted returns adding no value to fund investors. Despite somewhat strong basic indicators, Absa Smart is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Absa Multi and Absa Smart

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

The idea behind Absa Multi Managed and Absa Smart Alpha 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.