Correlation Between Centaur Bci and Allan Gray

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

By analyzing existing cross correlation between Centaur Bci Balanced and Allan Gray Equity, you can compare the effects of market volatilities on Centaur Bci and Allan Gray 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 Centaur Bci with a short position of Allan Gray. Check out your portfolio center. Please also check ongoing floating volatility patterns of Centaur Bci and Allan Gray.

Diversification Opportunities for Centaur Bci and Allan Gray

-0.06

Correlation Coefficient

Centaur Bci  Allan Gray

Good diversification

The 3 months correlation between Centaur and Allan is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Centaur Bci Balanced and Allan Gray Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Allan Gray Equity and Centaur Bci 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 Centaur Bci Balanced are associated (or correlated) with Allan Gray. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Allan Gray Equity has no effect on the direction of Centaur Bci i.e., Centaur Bci and Allan Gray go up and down completely randomly.

Pair Corralation between Centaur Bci and Allan Gray

Assuming the 90 days trading horizon Centaur Bci Balanced is expected to under-perform the Allan Gray. In addition to that, Centaur Bci is 1.41 times more volatile than Allan Gray Equity. It trades about -0.11 of its total potential returns per unit of risk. Allan Gray Equity is currently generating about 0.0 per unit of volatility. If you would invest  61,537  in Allan Gray Equity on December 2, 2024 and sell it today you would lose (50.00) from holding Allan Gray Equity or give up 0.08% of portfolio value over 90 days.

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

Centaur Bci Balanced  vs.  Allan Gray Equity

Centaur Bci Balanced

Risk-Adjusted Performance

Very Weak

Over the last 90 days Centaur Bci Balanced has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Centaur Bci is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Allan Gray Equity

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Centaur Bci and Allan Gray

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

The idea behind Centaur Bci Balanced and Allan Gray Equity 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.