Correlation Between Absa Multi and Satrix Resi

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

Diversification Opportunities for Absa Multi and Satrix Resi

-0.61

Correlation Coefficient

Absa Multi  Satrix Resi

Excellent diversification

The 3 months correlation between Absa and Satrix is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Absa Multi Managed and Satrix Resi ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Satrix Resi ETF 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 Satrix Resi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Satrix Resi ETF has no effect on the direction of Absa Multi i.e., Absa Multi and Satrix Resi go up and down completely randomly.

Pair Corralation between Absa Multi and Satrix Resi

Assuming the 90 days trading horizon Absa Multi Managed is expected to generate 0.23 times more return on investment than Satrix Resi. However, Absa Multi Managed is 4.34 times less risky than Satrix Resi. It trades about 0.05 of its potential returns per unit of risk. Satrix Resi ETF is currently generating about -0.04 per unit of risk. If you would invest  255.00  in Absa Multi Managed on October 25, 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	Weak
Accuracy	100.0%
Values	Daily Returns

Absa Multi Managed  vs.  Satrix Resi ETF

Absa Multi Managed

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Absa Multi Managed are ranked lower than 3 (%) 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.

Satrix Resi ETF

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Satrix Resi ETF has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Satrix Resi 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 Satrix Resi

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

The idea behind Absa Multi Managed and Satrix Resi ETF 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.