Correlation Between Barloworld and Astor Longshort

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

By analyzing existing cross correlation between Barloworld Ltd ADR and Astor Longshort Fund, you can compare the effects of market volatilities on Barloworld and Astor Longshort 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 Barloworld with a short position of Astor Longshort. Check out your portfolio center. Please also check ongoing floating volatility patterns of Barloworld and Astor Longshort.

Diversification Opportunities for Barloworld and Astor Longshort

-0.32

Correlation Coefficient

Barloworld  Astor Longshort

Very good diversification

The 3 months correlation between Barloworld and Astor is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Barloworld Ltd ADR and Astor Longshort Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Astor Longshort and Barloworld 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 Barloworld Ltd ADR are associated (or correlated) with Astor Longshort. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Astor Longshort has no effect on the direction of Barloworld i.e., Barloworld and Astor Longshort go up and down completely randomly.

Pair Corralation between Barloworld and Astor Longshort

Assuming the 90 days horizon Barloworld Ltd ADR is expected to generate 5.97 times more return on investment than Astor Longshort. However, Barloworld is 5.97 times more volatile than Astor Longshort Fund. It trades about 0.1 of its potential returns per unit of risk. Astor Longshort Fund is currently generating about -0.15 per unit of risk. If you would invest  520.00  in Barloworld Ltd ADR on October 7, 2024 and sell it today you would earn a total of  141.00  from holding Barloworld Ltd ADR or generate 27.12% return on investment over 90 days.

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

Barloworld Ltd ADR  vs.  Astor Longshort Fund

Barloworld ADR

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Barloworld Ltd ADR are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Barloworld showed solid returns over the last few months and may actually be approaching a breakup point.

Astor Longshort

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Astor Longshort Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's forward indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with Barloworld and Astor Longshort

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

The idea behind Barloworld Ltd ADR and Astor Longshort Fund 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.