Correlation Between Karooooo and Mix Telemats

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

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

Diversification Opportunities for Karooooo and Mix Telemats

-0.42

Correlation Coefficient

Karooooo  Mix Telemats

Very good diversification

The 3 months correlation between Karooooo and Mix is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Karooooo and Mix Telemats in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mix Telemats and Karooooo 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 Karooooo are associated (or correlated) with Mix Telemats. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mix Telemats has no effect on the direction of Karooooo i.e., Karooooo and Mix Telemats go up and down completely randomly.

Pair Corralation between Karooooo and Mix Telemats

If you would invest  4,040  in Karooooo on September 19, 2024 and sell it today you would earn a total of  496.00  from holding Karooooo or generate 12.28% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	1.59%
Values	Daily Returns

Karooooo  vs.  Mix Telemats

Karooooo

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Karooooo are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Karooooo displayed solid returns over the last few months and may actually be approaching a breakup point.

Mix Telemats

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mix Telemats has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Mix Telemats is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Karooooo and Mix Telemats

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

The idea behind Karooooo and Mix Telemats 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.