Correlation Between AfroCentric Investment and Growthpoint Properties
Can any of the company-specific risk be diversified away by investing in both AfroCentric Investment and Growthpoint 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 AfroCentric Investment and Growthpoint Properties into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AfroCentric Investment Corp and Growthpoint Properties, you can compare the effects of market volatilities on AfroCentric Investment and Growthpoint 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 AfroCentric Investment with a short position of Growthpoint Properties. Check out your portfolio center. Please also check ongoing floating volatility patterns of AfroCentric Investment and Growthpoint Properties.
Diversification Opportunities for AfroCentric Investment and Growthpoint Properties
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between AfroCentric and Growthpoint is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding AfroCentric Investment Corp and Growthpoint Properties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Growthpoint Properties and AfroCentric Investment 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 AfroCentric Investment Corp are associated (or correlated) with Growthpoint Properties. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Growthpoint Properties has no effect on the direction of AfroCentric Investment i.e., AfroCentric Investment and Growthpoint Properties go up and down completely randomly.
Pair Corralation between AfroCentric Investment and Growthpoint Properties
Assuming the 90 days trading horizon AfroCentric Investment Corp is expected to under-perform the Growthpoint Properties. In addition to that, AfroCentric Investment is 4.02 times more volatile than Growthpoint Properties. It trades about -0.02 of its total potential returns per unit of risk. Growthpoint Properties is currently generating about 0.08 per unit of volatility. If you would invest 115,365 in Growthpoint Properties on September 25, 2024 and sell it today you would earn a total of 14,335 from holding Growthpoint Properties or generate 12.43% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
AfroCentric Investment Corp vs. Growthpoint Properties
Performance |
Timeline |
AfroCentric Investment |
Growthpoint Properties |
AfroCentric Investment and Growthpoint Properties Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with AfroCentric Investment and Growthpoint Properties
The main advantage of trading using opposite AfroCentric Investment and Growthpoint Properties positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AfroCentric Investment position performs unexpectedly, Growthpoint 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 Growthpoint Properties will offset losses from the drop in Growthpoint Properties' long position.AfroCentric Investment vs. Life Healthcare | AfroCentric Investment vs. Netcare | AfroCentric Investment vs. Argent | AfroCentric Investment vs. Prosus NV |
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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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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