Correlation Between Coronation Industrial and Absa Managed

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

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

Diversification Opportunities for Coronation Industrial and Absa Managed

0.0

Correlation Coefficient

Coronation Industrial  Absa Managed

Pay attention - limited upside

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

Pair Corralation between Coronation Industrial and Absa Managed

If you would invest  27,100  in Coronation Industrial on September 12, 2024 and sell it today you would earn a total of  2,556  from holding Coronation Industrial or generate 9.43% return on investment over 90 days.

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

Coronation Industrial  vs.  Absa Managed

Coronation Industrial

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Coronation Industrial are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. Despite fairly weak basic indicators, Coronation Industrial may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Absa Managed

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Coronation Industrial and Absa Managed

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

The idea behind Coronation Industrial and Absa Managed 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.