Correlation Between Coronation Balanced and Denker SCI

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

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

Diversification Opportunities for Coronation Balanced and Denker SCI

0.95

Correlation Coefficient

Coronation Balanced  Denker SCI

Almost no diversification

The 3 months correlation between Coronation and Denker is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Coronation Balanced Plus and Denker SCI Balanced in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Denker SCI Balanced and Coronation Balanced 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 Balanced Plus are associated (or correlated) with Denker SCI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Denker SCI Balanced has no effect on the direction of Coronation Balanced i.e., Coronation Balanced and Denker SCI go up and down completely randomly.

Pair Corralation between Coronation Balanced and Denker SCI

Assuming the 90 days trading horizon Coronation Balanced Plus is expected to generate 1.29 times more return on investment than Denker SCI. However, Coronation Balanced is 1.29 times more volatile than Denker SCI Balanced. It trades about 0.26 of its potential returns per unit of risk. Denker SCI Balanced is currently generating about 0.17 per unit of risk. If you would invest  15,710  in Coronation Balanced Plus on September 12, 2024 and sell it today you would earn a total of  716.00  from holding Coronation Balanced Plus or generate 4.56% return on investment over 90 days.

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

Coronation Balanced Plus  vs.  Denker SCI Balanced

Coronation Balanced Plus

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Coronation Balanced Plus are ranked lower than 21 (%) of all funds and portfolios of funds over the last 90 days. Despite fairly weak basic indicators, Coronation Balanced may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Denker SCI Balanced

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Denker SCI Balanced are ranked lower than 18 (%) of all funds and portfolios of funds over the last 90 days. Despite somewhat strong technical and fundamental indicators, Denker SCI 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 Balanced and Denker SCI

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

The idea behind Coronation Balanced Plus and Denker SCI Balanced 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.

Check out your portfolio center.

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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.