Correlation Between Absa Smart and Absa Multi

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

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

Diversification Opportunities for Absa Smart and Absa Multi

0.0

Correlation Coefficient

Absa Smart  Absa Multi

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 Smart Alpha and Absa Multi managed Absolute in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Absa Multi managed and Absa Smart 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 Smart Alpha are associated (or correlated) with Absa Multi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Absa Multi managed has no effect on the direction of Absa Smart i.e., Absa Smart and Absa Multi go up and down completely randomly.

Pair Corralation between Absa Smart and Absa Multi

If you would invest  144.00  in Absa Multi managed Absolute on September 15, 2024 and sell it today you would earn a total of  4.00  from holding Absa Multi managed Absolute or generate 2.78% return on investment over 90 days.

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

Absa Smart Alpha  vs.  Absa Multi managed Absolute

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.

Absa Multi managed

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Absa Multi managed Absolute are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and fundamental indicators, Absa Multi 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 Smart and Absa Multi

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

The idea behind Absa Smart Alpha and Absa Multi managed Absolute 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..