Correlation Between AFRICAN DOMESTIC and PSG FINANCIAL

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

By analyzing existing cross correlation between AFRICAN DOMESTIC BOND and PSG FINANCIAL SERVICES, you can compare the effects of market volatilities on AFRICAN DOMESTIC and PSG FINANCIAL 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 AFRICAN DOMESTIC with a short position of PSG FINANCIAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of AFRICAN DOMESTIC and PSG FINANCIAL.

Diversification Opportunities for AFRICAN DOMESTIC and PSG FINANCIAL

0.0

Correlation Coefficient

AFRICAN DOMESTIC  PSG FINANCIAL

Pay attention - limited upside

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

Pair Corralation between AFRICAN DOMESTIC and PSG FINANCIAL

If you would invest  619.00  in AFRICAN DOMESTIC BOND on September 23, 2024 and sell it today you would earn a total of  5.00  from holding AFRICAN DOMESTIC BOND or generate 0.81% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

AFRICAN DOMESTIC BOND  vs.  PSG FINANCIAL SERVICES

AFRICAN DOMESTIC BOND

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AFRICAN DOMESTIC BOND has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, AFRICAN DOMESTIC is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

PSG FINANCIAL SERVICES

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PSG FINANCIAL SERVICES has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, PSG FINANCIAL is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with AFRICAN DOMESTIC and PSG FINANCIAL

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

The idea behind AFRICAN DOMESTIC BOND and PSG FINANCIAL SERVICES 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.