Correlation Between Centaur Bci and Nampak

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

Diversification Opportunities for Centaur Bci and Nampak

-0.4

Correlation Coefficient

Centaur Bci  Nampak

Very good diversification

The 3 months correlation between Centaur and Nampak is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Centaur Bci Balanced and Nampak in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nampak 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 Nampak. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nampak has no effect on the direction of Centaur Bci i.e., Centaur Bci and Nampak go up and down completely randomly.

Pair Corralation between Centaur Bci and Nampak

Assuming the 90 days trading horizon Centaur Bci is expected to generate 80.0 times less return on investment than Nampak. But when comparing it to its historical volatility, Centaur Bci Balanced is 113.26 times less risky than Nampak. It trades about 0.08 of its potential returns per unit of risk. Nampak is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  2,600,000  in Nampak on October 9, 2024 and sell it today you would earn a total of  1,500,000  from holding Nampak or generate 57.69% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.81%
Values	Daily Returns

Centaur Bci Balanced  vs.  Nampak

Centaur Bci Balanced

Risk-Adjusted Performance

0 of 100

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.

Nampak

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nampak has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Nampak is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Centaur Bci and Nampak

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

The idea behind Centaur Bci Balanced and Nampak 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.