Correlation Between Coreshares Index and Coronation Industrial

Can any of the company-specific risk be diversified away by investing in both Coreshares Index and Coronation Industrial 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 Coreshares Index and Coronation Industrial into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Coreshares Index Tracker and Coronation Industrial, you can compare the effects of market volatilities on Coreshares Index and Coronation Industrial 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 Coreshares Index with a short position of Coronation Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Coreshares Index and Coronation Industrial.

Diversification Opportunities for Coreshares Index and Coronation Industrial

0.34

Correlation Coefficient

Coreshares Index  Coronation Industrial

Weak diversification

The 3 months correlation between Coreshares and Coronation is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Coreshares Index Tracker and Coronation Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coronation Industrial and Coreshares Index 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 Coreshares Index Tracker are associated (or correlated) with Coronation Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Coronation Industrial has no effect on the direction of Coreshares Index i.e., Coreshares Index and Coronation Industrial go up and down completely randomly.

Pair Corralation between Coreshares Index and Coronation Industrial

Assuming the 90 days trading horizon Coreshares Index is expected to generate 45.65 times less return on investment than Coronation Industrial. But when comparing it to its historical volatility, Coreshares Index Tracker is 1.21 times less risky than Coronation Industrial. It trades about 0.0 of its potential returns per unit of risk. Coronation Industrial is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  28,570  in Coronation Industrial on December 5, 2024 and sell it today you would earn a total of  1,426  from holding Coronation Industrial or generate 4.99% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.65%
Values	Daily Returns

Coreshares Index Tracker  vs.  Coronation Industrial

Coreshares Index Tracker

Risk-Adjusted Performance

Weak

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

Coronation Industrial

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Coronation Industrial are ranked lower than 1 (%) of all funds and portfolios of funds over the last 90 days. Despite fairly strong basic indicators, Coronation Industrial is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Coreshares Index and Coronation Industrial

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

The idea behind Coreshares Index Tracker and Coronation Industrial 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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.