Correlation Between Libstar Holdings and Satrix MSCI

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

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

Diversification Opportunities for Libstar Holdings and Satrix MSCI

0.6

Correlation Coefficient

Libstar Holdings  Satrix MSCI

Poor diversification

The 3 months correlation between Libstar and Satrix is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Libstar Holdings and Satrix MSCI World in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Satrix MSCI World and Libstar Holdings 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 Libstar Holdings are associated (or correlated) with Satrix MSCI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Satrix MSCI World has no effect on the direction of Libstar Holdings i.e., Libstar Holdings and Satrix MSCI go up and down completely randomly.

Pair Corralation between Libstar Holdings and Satrix MSCI

Assuming the 90 days trading horizon Libstar Holdings is expected to generate 1.39 times less return on investment than Satrix MSCI. In addition to that, Libstar Holdings is 3.07 times more volatile than Satrix MSCI World. It trades about 0.03 of its total potential returns per unit of risk. Satrix MSCI World is currently generating about 0.15 per unit of volatility. If you would invest  921,500  in Satrix MSCI World on September 4, 2024 and sell it today you would earn a total of  80,600  from holding Satrix MSCI World or generate 8.75% return on investment over 90 days.

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

Libstar Holdings  vs.  Satrix MSCI World

Libstar Holdings

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Libstar Holdings are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, Libstar Holdings is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Satrix MSCI World

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Satrix MSCI World are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unsteady basic indicators, Satrix MSCI may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Libstar Holdings and Satrix MSCI

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

The idea behind Libstar Holdings and Satrix MSCI World 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.