Correlation Between Coronation Global and Telemasters Holdings

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

Diversification Opportunities for Coronation Global and Telemasters Holdings

0.32

Correlation Coefficient

Coronation Global  Telemasters Holdings

Weak diversification

The 3 months correlation between Coronation and Telemasters is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Coronation Global Equity and Telemasters Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Telemasters Holdings 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 Telemasters Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Telemasters Holdings has no effect on the direction of Coronation Global i.e., Coronation Global and Telemasters Holdings go up and down completely randomly.

Pair Corralation between Coronation Global and Telemasters Holdings

Assuming the 90 days trading horizon Coronation Global is expected to generate 17.85 times less return on investment than Telemasters Holdings. But when comparing it to its historical volatility, Coronation Global Equity is 2.81 times less risky than Telemasters Holdings. It trades about 0.03 of its potential returns per unit of risk. Telemasters Holdings is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  10,000  in Telemasters Holdings on December 29, 2024 and sell it today you would earn a total of  3,700  from holding Telemasters Holdings or generate 37.0% return on investment over 90 days.

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

Coronation Global Equity  vs.  Telemasters Holdings

Coronation Global Equity

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Coronation Global Equity are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. Despite somewhat strong basic indicators, Coronation Global is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Telemasters Holdings

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Telemasters Holdings are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Telemasters Holdings exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Coronation Global and Telemasters Holdings

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

The idea behind Coronation Global Equity and Telemasters Holdings 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.

Check out your portfolio center.

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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.