Correlation Between Boxer Retail and Nampak

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

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

Diversification Opportunities for Boxer Retail and Nampak

-0.22

Correlation Coefficient

Boxer Retail  Nampak

Very good diversification

The 3 months correlation between Boxer and Nampak is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Boxer Retail and Nampak in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nampak and Boxer Retail 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 Boxer Retail are associated (or correlated) with Nampak. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nampak has no effect on the direction of Boxer Retail i.e., Boxer Retail and Nampak go up and down completely randomly.

Pair Corralation between Boxer Retail and Nampak

Assuming the 90 days trading horizon Boxer Retail is expected to generate 1.57 times more return on investment than Nampak. However, Boxer Retail is 1.57 times more volatile than Nampak. It trades about 0.21 of its potential returns per unit of risk. Nampak is currently generating about 0.09 per unit of risk. If you would invest  540,000  in Boxer Retail on September 29, 2024 and sell it today you would earn a total of  99,100  from holding Boxer Retail or generate 18.35% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	16.8%
Values	Daily Returns

Boxer Retail  vs.  Nampak

Boxer Retail

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Boxer Retail are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Boxer Retail exhibited solid returns over the last few months and may actually be approaching a breakup point.

Nampak

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nampak has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Nampak is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Boxer Retail and Nampak

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

The idea behind Boxer Retail and Nampak 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.