Correlation Between Centaur Bci and Sab Zenzele

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

Diversification Opportunities for Centaur Bci and Sab Zenzele

-0.54

Correlation Coefficient

Centaur Bci  Sab Zenzele

Excellent diversification

The 3 months correlation between Centaur and Sab is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Centaur Bci Balanced and Sab Zenzele Kabili in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sab Zenzele Kabili 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 Sab Zenzele. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sab Zenzele Kabili has no effect on the direction of Centaur Bci i.e., Centaur Bci and Sab Zenzele go up and down completely randomly.

Pair Corralation between Centaur Bci and Sab Zenzele

Assuming the 90 days trading horizon Centaur Bci is expected to generate 1.9 times less return on investment than Sab Zenzele. But when comparing it to its historical volatility, Centaur Bci Balanced is 10.8 times less risky than Sab Zenzele. It trades about 0.12 of its potential returns per unit of risk. Sab Zenzele Kabili is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  400,000  in Sab Zenzele Kabili on September 12, 2024 and sell it today you would lose (59,900) from holding Sab Zenzele Kabili or give up 14.97% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.86%
Values	Daily Returns

Centaur Bci Balanced  vs.  Sab Zenzele Kabili

Centaur Bci Balanced

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Centaur Bci Balanced are ranked lower than 19 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Centaur Bci may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Sab Zenzele Kabili

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sab Zenzele Kabili has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Centaur Bci and Sab Zenzele

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

The idea behind Centaur Bci Balanced and Sab Zenzele Kabili 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.