Correlation Between Absa Multi and NewFunds MAPPS

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

By analyzing existing cross correlation between Absa Multi Managed and NewFunds MAPPS Growth, you can compare the effects of market volatilities on Absa Multi and NewFunds MAPPS 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 Absa Multi with a short position of NewFunds MAPPS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Absa Multi and NewFunds MAPPS.

Diversification Opportunities for Absa Multi and NewFunds MAPPS

-0.01

Correlation Coefficient

Absa Multi  NewFunds MAPPS

Good diversification

The 3 months correlation between Absa and NewFunds is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Absa Multi Managed and NewFunds MAPPS Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NewFunds MAPPS Growth and Absa Multi 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 Absa Multi Managed are associated (or correlated) with NewFunds MAPPS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NewFunds MAPPS Growth has no effect on the direction of Absa Multi i.e., Absa Multi and NewFunds MAPPS go up and down completely randomly.

Pair Corralation between Absa Multi and NewFunds MAPPS

Assuming the 90 days trading horizon Absa Multi Managed is expected to generate 0.57 times more return on investment than NewFunds MAPPS. However, Absa Multi Managed is 1.76 times less risky than NewFunds MAPPS. It trades about 0.05 of its potential returns per unit of risk. NewFunds MAPPS Growth is currently generating about -0.06 per unit of risk. If you would invest  255.00  in Absa Multi Managed on October 24, 2024 and sell it today you would earn a total of  3.00  from holding Absa Multi Managed or generate 1.18% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.36%
Values	Daily Returns

Absa Multi Managed  vs.  NewFunds MAPPS Growth

Absa Multi Managed

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Absa Multi Managed are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. In spite of comparatively stable basic indicators, Absa Multi is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

NewFunds MAPPS Growth

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NewFunds MAPPS Growth has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong primary indicators, NewFunds MAPPS is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Absa Multi and NewFunds MAPPS

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

The idea behind Absa Multi Managed and NewFunds MAPPS Growth 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.