Correlation Between Barloworld and Amplify Online

Can any of the company-specific risk be diversified away by investing in both Barloworld and Amplify Online 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 Amplify Online 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 Amplify Online Retail, you can compare the effects of market volatilities on Barloworld and Amplify Online 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 Amplify Online. Check out your portfolio center. Please also check ongoing floating volatility patterns of Barloworld and Amplify Online.

Diversification Opportunities for Barloworld and Amplify Online

0.3

Correlation Coefficient

Barloworld  Amplify Online

Weak diversification

The 3 months correlation between Barloworld and Amplify is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Barloworld Ltd ADR and Amplify Online Retail in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amplify Online Retail 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 Amplify Online. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amplify Online Retail has no effect on the direction of Barloworld i.e., Barloworld and Amplify Online go up and down completely randomly.

Pair Corralation between Barloworld and Amplify Online

Assuming the 90 days horizon Barloworld Ltd ADR is expected to generate 6.45 times more return on investment than Amplify Online. However, Barloworld is 6.45 times more volatile than Amplify Online Retail. It trades about 0.1 of its potential returns per unit of risk. Amplify Online Retail is currently generating about 0.05 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 Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Barloworld Ltd ADR  vs.  Amplify Online Retail

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.

Amplify Online Retail

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Amplify Online Retail are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, Amplify Online may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Barloworld and Amplify Online

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

The idea behind Barloworld Ltd ADR and Amplify Online Retail 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.