Correlation Between Coronation Top and Coronation Industrial

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

By analyzing existing cross correlation between Coronation Top 20 and Coronation Industrial, you can compare the effects of market volatilities on Coronation Top and Coronation Industrial 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 Top with a short position of Coronation Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Coronation Top and Coronation Industrial.

Diversification Opportunities for Coronation Top and Coronation Industrial

0.43

Correlation Coefficient

Coronation Top  Coronation Industrial

Very weak diversification

The 3 months correlation between Coronation and Coronation is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Coronation Top 20 and Coronation Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coronation Industrial and Coronation Top 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 Top 20 are associated (or correlated) with Coronation Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Coronation Industrial has no effect on the direction of Coronation Top i.e., Coronation Top and Coronation Industrial go up and down completely randomly.

Pair Corralation between Coronation Top and Coronation Industrial

Assuming the 90 days trading horizon Coronation Top is expected to generate 4.3 times less return on investment than Coronation Industrial. But when comparing it to its historical volatility, Coronation Top 20 is 1.24 times less risky than Coronation Industrial. It trades about 0.05 of its potential returns per unit of risk. Coronation Industrial is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  27,079  in Coronation Industrial on September 16, 2024 and sell it today you would earn a total of  2,829  from holding Coronation Industrial or generate 10.45% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	96.92%
Values	Daily Returns

Coronation Top 20  vs.  Coronation Industrial

Coronation Top 20

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Coronation Top 20 are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Coronation Top is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Coronation Industrial

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Coronation Industrial are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. Despite fairly inconsistent basic indicators, Coronation Industrial may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Coronation Top and Coronation Industrial

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

The idea behind Coronation Top 20 and Coronation Industrial 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 Commodity Directory module to find actively traded commodities issued by global exchanges.