Correlation Between Sanlam Global and ETC On

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

By analyzing existing cross correlation between Sanlam Global Artificial and ETC on CMCI, you can compare the effects of market volatilities on Sanlam Global and ETC On 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 Sanlam Global with a short position of ETC On. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sanlam Global and ETC On.

Diversification Opportunities for Sanlam Global and ETC On

0.3

Correlation Coefficient

Sanlam Global  ETC On

Weak diversification

The 3 months correlation between Sanlam and ETC is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Sanlam Global Artificial and ETC on CMCI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ETC on CMCI and Sanlam 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 Sanlam Global Artificial are associated (or correlated) with ETC On. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ETC on CMCI has no effect on the direction of Sanlam Global i.e., Sanlam Global and ETC On go up and down completely randomly.

Pair Corralation between Sanlam Global and ETC On

Assuming the 90 days trading horizon Sanlam Global Artificial is expected to under-perform the ETC On. In addition to that, Sanlam Global is 2.35 times more volatile than ETC on CMCI. It trades about -0.02 of its total potential returns per unit of risk. ETC on CMCI is currently generating about 0.2 per unit of volatility. If you would invest  17,422  in ETC on CMCI on September 22, 2024 and sell it today you would earn a total of  342.00  from holding ETC on CMCI or generate 1.96% return on investment over 90 days.

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

Sanlam Global Artificial  vs.  ETC on CMCI

Sanlam Global Artificial

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Sanlam Global Artificial are ranked lower than 17 (%) of all funds and portfolios of funds over the last 90 days. Even with relatively weak technical and fundamental indicators, Sanlam Global reported solid returns over the last few months and may actually be approaching a breakup point.

ETC on CMCI

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in ETC on CMCI are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, ETC On is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Sanlam Global and ETC On

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

The idea behind Sanlam Global Artificial and ETC on CMCI 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.