Correlation Between Coronation Industrial and Coronation Capital

Can any of the company-specific risk be diversified away by investing in both Coronation Industrial 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 Industrial 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 Industrial and Coronation Capital Plus, you can compare the effects of market volatilities on Coronation Industrial 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 Industrial with a short position of Coronation Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Coronation Industrial and Coronation Capital.

Diversification Opportunities for Coronation Industrial and Coronation Capital

0.75

Correlation Coefficient

Coronation Industrial  Coronation Capital

Poor diversification

The 3 months correlation between Coronation and Coronation is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Coronation Industrial 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 Industrial 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 Industrial 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 Industrial i.e., Coronation Industrial and Coronation Capital go up and down completely randomly.

Pair Corralation between Coronation Industrial and Coronation Capital

Assuming the 90 days trading horizon Coronation Industrial is expected to generate 1.91 times more return on investment than Coronation Capital. However, Coronation Industrial is 1.91 times more volatile than Coronation Capital Plus. It trades about 0.35 of its potential returns per unit of risk. Coronation Capital Plus is currently generating about 0.4 per unit of risk. If you would invest  28,566  in Coronation Industrial on September 17, 2024 and sell it today you would earn a total of  1,342  from holding Coronation Industrial or generate 4.7% return on investment over 90 days.

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

Coronation Industrial  vs.  Coronation Capital Plus

Coronation Industrial

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Coronation Industrial are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. Despite fairly weak basic indicators, Coronation Industrial may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Coronation Capital Plus

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Coronation Capital Plus are ranked lower than 16 (%) 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 current stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Coronation Industrial and Coronation Capital

The main advantage of trading using opposite Coronation Industrial and Coronation Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Coronation Industrial 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 Industrial 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.