Correlation Between Trematon Capital and Tiger Brands

Can any of the company-specific risk be diversified away by investing in both Trematon Capital and Tiger Brands 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 Tiger Brands 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 Tiger Brands, you can compare the effects of market volatilities on Trematon Capital and Tiger Brands 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 Tiger Brands. Check out your portfolio center. Please also check ongoing floating volatility patterns of Trematon Capital and Tiger Brands.

Diversification Opportunities for Trematon Capital and Tiger Brands

-0.58

Correlation Coefficient

Trematon Capital  Tiger Brands

Excellent diversification

The 3 months correlation between Trematon and Tiger is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Trematon Capital Investments and Tiger Brands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tiger Brands 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 Tiger Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tiger Brands has no effect on the direction of Trematon Capital i.e., Trematon Capital and Tiger Brands go up and down completely randomly.

Pair Corralation between Trematon Capital and Tiger Brands

Assuming the 90 days trading horizon Trematon Capital Investments is expected to under-perform the Tiger Brands. In addition to that, Trematon Capital is 3.16 times more volatile than Tiger Brands. It trades about -0.09 of its total potential returns per unit of risk. Tiger Brands is currently generating about 0.25 per unit of volatility. If you would invest  2,404,200  in Tiger Brands on September 15, 2024 and sell it today you would earn a total of  495,800  from holding Tiger Brands or generate 20.62% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.46%
Values	Daily Returns

Trematon Capital Investments  vs.  Tiger Brands

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 unsteady 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.

Tiger Brands

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Tiger Brands are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Tiger Brands exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Trematon Capital and Tiger Brands

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

The idea behind Trematon Capital Investments and Tiger Brands 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.