Correlation Between Brimstone Investment and African Rainbow

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

By analyzing existing cross correlation between Brimstone Investment and African Rainbow Capital, you can compare the effects of market volatilities on Brimstone Investment and African Rainbow 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 Brimstone Investment with a short position of African Rainbow. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brimstone Investment and African Rainbow.

Diversification Opportunities for Brimstone Investment and African Rainbow

0.0

Correlation Coefficient

Brimstone Investment  African Rainbow

Pay attention - limited upside

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

Pair Corralation between Brimstone Investment and African Rainbow

If you would invest (100.00) in African Rainbow Capital on September 16, 2024 and sell it today you would earn a total of  100.00  from holding African Rainbow Capital or generate -100.0% return on investment over 90 days.

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

Brimstone Investment  vs.  African Rainbow Capital

Brimstone Investment

Risk-Adjusted Performance

0 of 100

Very Weak

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

African Rainbow Capital

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Brimstone Investment and African Rainbow

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

The idea behind Brimstone Investment and African Rainbow Capital 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.