Correlation Between Absa Group and Banco Del

Can any of the company-specific risk be diversified away by investing in both Absa Group and Banco Del 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 Absa Group and Banco Del into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Absa Group Ltd and Banco del Bajo, you can compare the effects of market volatilities on Absa Group and Banco Del 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 Absa Group with a short position of Banco Del. Check out your portfolio center. Please also check ongoing floating volatility patterns of Absa Group and Banco Del.

Diversification Opportunities for Absa Group and Banco Del

-0.12

Correlation Coefficient

Absa Group  Banco Del

Good diversification

The 3 months correlation between Absa and Banco is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Absa Group Ltd and Banco del Bajo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Banco del Bajo and Absa Group 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 Absa Group Ltd are associated (or correlated) with Banco Del. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Banco del Bajo has no effect on the direction of Absa Group i.e., Absa Group and Banco Del go up and down completely randomly.

Pair Corralation between Absa Group and Banco Del

Assuming the 90 days horizon Absa Group Ltd is expected to under-perform the Banco Del. But the pink sheet apears to be less risky and, when comparing its historical volatility, Absa Group Ltd is 3.32 times less risky than Banco Del. The pink sheet trades about -0.12 of its potential returns per unit of risk. The Banco del Bajo is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  210.00  in Banco del Bajo on October 20, 2024 and sell it today you would earn a total of  6.00  from holding Banco del Bajo or generate 2.86% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	26.32%
Values	Daily Returns

Absa Group Ltd  vs.  Banco del Bajo

Absa Group

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Absa Group Ltd are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, Absa Group is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Banco del Bajo

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Banco del Bajo has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's forward-looking indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Absa Group and Banco Del

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

The idea behind Absa Group Ltd and Banco del Bajo 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.