Correlation Between Alpha Trust and Jumbo SA

Can any of the company-specific risk be diversified away by investing in both Alpha Trust and Jumbo SA 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 Alpha Trust and Jumbo SA into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Alpha Trust Mutual and Jumbo SA, you can compare the effects of market volatilities on Alpha Trust and Jumbo SA 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 Alpha Trust with a short position of Jumbo SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alpha Trust and Jumbo SA.

Diversification Opportunities for Alpha Trust and Jumbo SA

-0.1

Correlation Coefficient

Alpha Trust  Jumbo SA

Good diversification

The 3 months correlation between Alpha and Jumbo is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Alpha Trust Mutual and Jumbo SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jumbo SA and Alpha Trust 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 Alpha Trust Mutual are associated (or correlated) with Jumbo SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jumbo SA has no effect on the direction of Alpha Trust i.e., Alpha Trust and Jumbo SA go up and down completely randomly.

Pair Corralation between Alpha Trust and Jumbo SA

Assuming the 90 days trading horizon Alpha Trust Mutual is expected to under-perform the Jumbo SA. But the stock apears to be less risky and, when comparing its historical volatility, Alpha Trust Mutual is 3.62 times less risky than Jumbo SA. The stock trades about -0.03 of its potential returns per unit of risk. The Jumbo SA is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  2,534  in Jumbo SA on December 30, 2024 and sell it today you would earn a total of  66.00  from holding Jumbo SA or generate 2.6% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Alpha Trust Mutual  vs.  Jumbo SA

Alpha Trust Mutual

Risk-Adjusted Performance

Very Weak

Over the last 90 days Alpha Trust Mutual has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Alpha Trust is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Jumbo SA

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Jumbo SA are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Jumbo SA is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Alpha Trust and Jumbo SA

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

The idea behind Alpha Trust Mutual and Jumbo SA 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.