Correlation Between Armada Hflr and Coronation Global

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

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

Diversification Opportunities for Armada Hflr and Coronation Global

-0.66

Correlation Coefficient

Armada Hflr  Coronation Global

Excellent diversification

The 3 months correlation between Armada and Coronation is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Armada Hflr Pr and Coronation Global Optimum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coronation Global Optimum and Armada Hflr 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 Armada Hflr Pr are associated (or correlated) with Coronation Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Coronation Global Optimum has no effect on the direction of Armada Hflr i.e., Armada Hflr and Coronation Global go up and down completely randomly.

Pair Corralation between Armada Hflr and Coronation Global

Considering the 90-day investment horizon Armada Hflr Pr is expected to under-perform the Coronation Global. In addition to that, Armada Hflr is 1.64 times more volatile than Coronation Global Optimum. It trades about -0.07 of its total potential returns per unit of risk. Coronation Global Optimum is currently generating about 0.15 per unit of volatility. If you would invest  16,584  in Coronation Global Optimum on September 13, 2024 and sell it today you would earn a total of  1,446  from holding Coronation Global Optimum or generate 8.72% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Armada Hflr Pr  vs.  Coronation Global Optimum

Armada Hflr Pr

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Armada Hflr Pr has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong technical indicators, Armada Hflr is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

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.

Pair Trading with Armada Hflr and Coronation Global

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

The idea behind Armada Hflr Pr and Coronation Global Optimum 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.