Correlation Between Trematon Capital and Investec Limited

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

By analyzing existing cross correlation between Trematon Capital Investments and Investec Limited NON, you can compare the effects of market volatilities on Trematon Capital and Investec Limited 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 Trematon Capital with a short position of Investec Limited. Check out your portfolio center. Please also check ongoing floating volatility patterns of Trematon Capital and Investec Limited.

Diversification Opportunities for Trematon Capital and Investec Limited

-0.27

Correlation Coefficient

Trematon Capital  Investec Limited

Very good diversification

The 3 months correlation between Trematon and Investec is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Trematon Capital Investments and Investec Limited NON in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Investec Limited NON and Trematon Capital 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 Trematon Capital Investments are associated (or correlated) with Investec Limited. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Investec Limited NON has no effect on the direction of Trematon Capital i.e., Trematon Capital and Investec Limited go up and down completely randomly.

Pair Corralation between Trematon Capital and Investec Limited

Assuming the 90 days trading horizon Trematon Capital Investments is expected to under-perform the Investec Limited. In addition to that, Trematon Capital is 2.72 times more volatile than Investec Limited NON. It trades about -0.07 of its total potential returns per unit of risk. Investec Limited NON is currently generating about 0.07 per unit of volatility. If you would invest  882,700  in Investec Limited NON on September 14, 2024 and sell it today you would earn a total of  47,300  from holding Investec Limited NON or generate 5.36% return on investment over 90 days.

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

Trematon Capital Investments  vs.  Investec Limited NON

Trematon Capital Inv

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Trematon Capital Investments has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Investec Limited NON

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Investec Limited NON are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Investec Limited is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Trematon Capital and Investec Limited

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

The idea behind Trematon Capital Investments and Investec Limited NON 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .