Correlation Between Coronation Global and Arrowhead Properties

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

Diversification Opportunities for Coronation Global and Arrowhead Properties

0.82

Correlation Coefficient

Coronation Global  Arrowhead Properties

Very poor diversification

The 3 months correlation between Coronation and Arrowhead is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Coronation Global Equity and Arrowhead Properties Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arrowhead Properties 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 Arrowhead Properties. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arrowhead Properties has no effect on the direction of Coronation Global i.e., Coronation Global and Arrowhead Properties go up and down completely randomly.

Pair Corralation between Coronation Global and Arrowhead Properties

Assuming the 90 days trading horizon Coronation Global is expected to generate 1.95 times less return on investment than Arrowhead Properties. But when comparing it to its historical volatility, Coronation Global Equity is 1.73 times less risky than Arrowhead Properties. It trades about 0.02 of its potential returns per unit of risk. Arrowhead Properties Ltd is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  48,213  in Arrowhead Properties Ltd on October 10, 2024 and sell it today you would earn a total of  287.00  from holding Arrowhead Properties Ltd or generate 0.6% return on investment over 90 days.

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

Coronation Global Equity  vs.  Arrowhead Properties Ltd

Coronation Global Equity

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Coronation Global Equity are ranked lower than 17 (%) of all funds and portfolios of funds over the last 90 days. Despite somewhat inconsistent basic indicators, Coronation Global sustained solid returns over the last few months and may actually be approaching a breakup point.

Arrowhead Properties

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Arrowhead Properties Ltd are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Arrowhead Properties may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Coronation Global and Arrowhead Properties

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

The idea behind Coronation Global Equity and Arrowhead Properties Ltd 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.