Correlation Between Coronation Global and Discovery Balanced

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

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

Diversification Opportunities for Coronation Global and Discovery Balanced

0.9

Correlation Coefficient

Coronation Global  Discovery Balanced

Almost no diversification

The 3 months correlation between Coronation and Discovery is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Coronation Global Optimum and Discovery Balanced in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Discovery Balanced and Coronation Global 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 Global Optimum are associated (or correlated) with Discovery Balanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Discovery Balanced has no effect on the direction of Coronation Global i.e., Coronation Global and Discovery Balanced go up and down completely randomly.

Pair Corralation between Coronation Global and Discovery Balanced

Assuming the 90 days trading horizon Coronation Global Optimum is expected to generate 1.7 times more return on investment than Discovery Balanced. However, Coronation Global is 1.7 times more volatile than Discovery Balanced. It trades about 0.09 of its potential returns per unit of risk. Discovery Balanced is currently generating about 0.12 per unit of risk. If you would invest  16,728  in Coronation Global Optimum on September 14, 2024 and sell it today you would earn a total of  1,562  from holding Coronation Global Optimum or generate 9.34% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	98.43%
Values	Daily Returns

Coronation Global Optimum  vs.  Discovery Balanced

Coronation Global Optimum

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Coronation Global Optimum are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Coronation Global may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Discovery Balanced

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Discovery Balanced are ranked lower than 14 (%) of all funds and portfolios of funds over the last 90 days. Despite fairly strong basic indicators, Discovery Balanced is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Coronation Global and Discovery Balanced

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

The idea behind Coronation Global Optimum and Discovery 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.

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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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.