Correlation Between Boeing and Absa Group

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

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

Diversification Opportunities for Boeing and Absa Group

-0.06

Correlation Coefficient

Boeing  Absa Group

Good diversification

The 3 months correlation between Boeing and Absa is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding The Boeing and Absa Group Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Absa Group and Boeing 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 The Boeing are associated (or correlated) with Absa Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Absa Group has no effect on the direction of Boeing i.e., Boeing and Absa Group go up and down completely randomly.

Pair Corralation between Boeing and Absa Group

Allowing for the 90-day total investment horizon The Boeing is expected to generate 1.02 times more return on investment than Absa Group. However, Boeing is 1.02 times more volatile than Absa Group Ltd. It trades about 0.02 of its potential returns per unit of risk. Absa Group Ltd is currently generating about 0.01 per unit of risk. If you would invest  17,934  in The Boeing on December 24, 2024 and sell it today you would earn a total of  156.00  from holding The Boeing or generate 0.87% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.36%
Values	Daily Returns

The Boeing  vs.  Absa Group Ltd

Boeing

Risk-Adjusted Performance

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in The Boeing are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Boeing is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Absa Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days Absa Group Ltd has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

Pair Trading with Boeing and Absa Group

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

The idea behind The Boeing and Absa Group Ltd 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.