Correlation Between Coronation Global and Brimstone Investment

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

Diversification Opportunities for Coronation Global and Brimstone Investment

-0.81

Correlation Coefficient

Coronation Global  Brimstone Investment

Pay attention - limited upside

The 3 months correlation between Coronation and Brimstone is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding Coronation Global Equity and Brimstone Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brimstone Investment 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 Brimstone Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brimstone Investment has no effect on the direction of Coronation Global i.e., Coronation Global and Brimstone Investment go up and down completely randomly.

Pair Corralation between Coronation Global and Brimstone Investment

Assuming the 90 days trading horizon Coronation Global Equity is expected to generate 0.35 times more return on investment than Brimstone Investment. However, Coronation Global Equity is 2.83 times less risky than Brimstone Investment. It trades about 0.21 of its potential returns per unit of risk. Brimstone Investment is currently generating about -0.05 per unit of risk. If you would invest  229.00  in Coronation Global Equity on October 21, 2024 and sell it today you would earn a total of  39.00  from holding Coronation Global Equity or generate 17.03% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	98.39%
Values	Daily Returns

Coronation Global Equity  vs.  Brimstone Investment

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.

Brimstone Investment

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Brimstone Investment has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady 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 Coronation Global and Brimstone Investment

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

The idea behind Coronation Global Equity and Brimstone Investment 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.