Correlation Between Coronation Global and Blue Label

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

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

Diversification Opportunities for Coronation Global and Blue Label

0.15

Correlation Coefficient

Coronation Global  Blue Label

Average diversification

The 3 months correlation between Coronation and Blue is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Coronation Global Equity and Blue Label Telecoms in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blue Label Telecoms and Coronation Global 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 Global Equity are associated (or correlated) with Blue Label. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blue Label Telecoms has no effect on the direction of Coronation Global i.e., Coronation Global and Blue Label go up and down completely randomly.

Pair Corralation between Coronation Global and Blue Label

Assuming the 90 days trading horizon Coronation Global Equity is expected to generate 0.83 times more return on investment than Blue Label. However, Coronation Global Equity is 1.2 times less risky than Blue Label. It trades about 0.21 of its potential returns per unit of risk. Blue Label Telecoms is currently generating about 0.03 per unit of risk. If you would invest  232.00  in Coronation Global Equity on October 24, 2024 and sell it today you would earn a total of  38.00  from holding Coronation Global Equity or generate 16.38% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.36%
Values	Daily Returns

Coronation Global Equity  vs.  Blue Label Telecoms

Coronation Global Equity

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Coronation Global Equity are ranked lower than 16 (%) of all funds and portfolios of funds over the last 90 days. Despite somewhat weak basic indicators, Coronation Global sustained solid returns over the last few months and may actually be approaching a breakup point.

Blue Label Telecoms

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Blue Label Telecoms are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, Blue Label is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Coronation Global and Blue Label

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

The idea behind Coronation Global Equity and Blue Label Telecoms 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.