Correlation Between Coronation Global and Coronation Capital

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

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

Diversification Opportunities for Coronation Global and Coronation Capital

0.91

Correlation Coefficient

Coronation Global  Coronation Capital

Almost no diversification

The 3 months correlation between Coronation and Coronation is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Coronation Global Opportunitie and Coronation Capital Plus in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coronation Capital Plus and Coronation Global 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 Coronation Global Opportunities are associated (or correlated) with Coronation Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Coronation Capital Plus has no effect on the direction of Coronation Global i.e., Coronation Global and Coronation Capital go up and down completely randomly.

Pair Corralation between Coronation Global and Coronation Capital

Assuming the 90 days trading horizon Coronation Global is expected to generate 1.4 times less return on investment than Coronation Capital. In addition to that, Coronation Global is 1.93 times more volatile than Coronation Capital Plus. It trades about 0.05 of its total potential returns per unit of risk. Coronation Capital Plus is currently generating about 0.13 per unit of volatility. If you would invest  5,701  in Coronation Capital Plus on December 5, 2024 and sell it today you would earn a total of  155.00  from holding Coronation Capital Plus or generate 2.72% return on investment over 90 days.

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

Coronation Global Opportunitie  vs.  Coronation Capital Plus

Coronation Global

Risk-Adjusted Performance

Very Weak

Over the last 90 days Coronation Global Opportunities has generated negative risk-adjusted returns adding no value to fund investors. Despite fairly strong basic indicators, Coronation Global is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Coronation Capital Plus

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Coronation Capital Plus are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. Despite fairly strong basic indicators, Coronation Capital is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Coronation Global and Coronation Capital

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

The idea behind Coronation Global Opportunities and Coronation Capital Plus 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.