Correlation Between CAFCA and MEIKLES AFRICA

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

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

Diversification Opportunities for CAFCA and MEIKLES AFRICA

0.0

Correlation Coefficient

CAFCA  MEIKLES AFRICA

Pay attention - limited upside

The 3 months correlation between CAFCA and MEIKLES is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding CAFCA LIMITED and MEIKLES AFRICA LIMITED in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MEIKLES AFRICA and CAFCA 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 CAFCA LIMITED are associated (or correlated) with MEIKLES AFRICA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MEIKLES AFRICA has no effect on the direction of CAFCA i.e., CAFCA and MEIKLES AFRICA go up and down completely randomly.

Pair Corralation between CAFCA and MEIKLES AFRICA

If you would invest  140,000  in CAFCA LIMITED on October 12, 2024 and sell it today you would earn a total of  65,000  from holding CAFCA LIMITED or generate 46.43% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

CAFCA LIMITED  vs.  MEIKLES AFRICA LIMITED

CAFCA LIMITED

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in CAFCA LIMITED are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of fairly inconsistent fundamental indicators, CAFCA showed solid returns over the last few months and may actually be approaching a breakup point.

MEIKLES AFRICA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MEIKLES AFRICA LIMITED has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward indicators, MEIKLES AFRICA is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with CAFCA and MEIKLES AFRICA

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

The idea behind CAFCA LIMITED and MEIKLES AFRICA LIMITED 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.