Correlation Between CA Sales and Wesizwe

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

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

Diversification Opportunities for CA Sales and Wesizwe

-0.45

Correlation Coefficient

CA Sales  Wesizwe

Very good diversification

The 3 months correlation between CAA and Wesizwe is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding CA Sales Holdings and Wesizwe in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wesizwe and CA Sales 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 CA Sales Holdings are associated (or correlated) with Wesizwe. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wesizwe has no effect on the direction of CA Sales i.e., CA Sales and Wesizwe go up and down completely randomly.

Pair Corralation between CA Sales and Wesizwe

Assuming the 90 days trading horizon CA Sales Holdings is expected to generate 0.63 times more return on investment than Wesizwe. However, CA Sales Holdings is 1.6 times less risky than Wesizwe. It trades about -0.11 of its potential returns per unit of risk. Wesizwe is currently generating about -0.2 per unit of risk. If you would invest  166,900  in CA Sales Holdings on October 22, 2024 and sell it today you would lose (11,800) from holding CA Sales Holdings or give up 7.07% of portfolio value over 90 days.

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

CA Sales Holdings  vs.  Wesizwe

CA Sales Holdings

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in CA Sales Holdings are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, CA Sales is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Wesizwe

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Wesizwe has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in February 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with CA Sales and Wesizwe

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

The idea behind CA Sales Holdings and Wesizwe 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.