Correlation Between Centaur Bci and Coronation Property

Can any of the company-specific risk be diversified away by investing in both Centaur Bci and Coronation Property 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 Coronation Property 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 Coronation Property Equity, you can compare the effects of market volatilities on Centaur Bci and Coronation Property 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 Coronation Property. Check out your portfolio center. Please also check ongoing floating volatility patterns of Centaur Bci and Coronation Property.

Diversification Opportunities for Centaur Bci and Coronation Property

0.95

Correlation Coefficient

Centaur Bci  Coronation Property

Almost no diversification

The 3 months correlation between Centaur and Coronation is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Centaur Bci Balanced and Coronation Property Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coronation Property 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 Coronation Property. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Coronation Property has no effect on the direction of Centaur Bci i.e., Centaur Bci and Coronation Property go up and down completely randomly.

Pair Corralation between Centaur Bci and Coronation Property

Assuming the 90 days trading horizon Centaur Bci Balanced is expected to generate 0.85 times more return on investment than Coronation Property. However, Centaur Bci Balanced is 1.18 times less risky than Coronation Property. It trades about -0.12 of its potential returns per unit of risk. Coronation Property Equity is currently generating about -0.16 per unit of risk. If you would invest  244.00  in Centaur Bci Balanced on December 5, 2024 and sell it today you would lose (13.00) from holding Centaur Bci Balanced or give up 5.33% of portfolio value over 90 days.

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

Centaur Bci Balanced  vs.  Coronation Property 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.

Coronation Property

Risk-Adjusted Performance

Very Weak

Over the last 90 days Coronation Property Equity has generated negative risk-adjusted returns adding no value to fund investors. Despite latest weak performance, the Fund's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with Centaur Bci and Coronation Property

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

The idea behind Centaur Bci Balanced and Coronation Property 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.