Correlation Between City Lodge and Nampak
Can any of the company-specific risk be diversified away by investing in both City Lodge 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 City Lodge and Nampak into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between City Lodge Hotels and Nampak, you can compare the effects of market volatilities on City Lodge 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 City Lodge with a short position of Nampak. Check out your portfolio center. Please also check ongoing floating volatility patterns of City Lodge and Nampak.
Diversification Opportunities for City Lodge and Nampak
-0.56 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between City and Nampak is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding City Lodge Hotels and Nampak in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nampak and City Lodge 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 City Lodge Hotels 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 City Lodge i.e., City Lodge and Nampak go up and down completely randomly.
Pair Corralation between City Lodge and Nampak
Assuming the 90 days trading horizon City Lodge Hotels is expected to under-perform the Nampak. In addition to that, City Lodge is 1.08 times more volatile than Nampak. It trades about -0.23 of its total potential returns per unit of risk. Nampak is currently generating about 0.02 per unit of volatility. If you would invest 4,177,500 in Nampak on December 27, 2024 and sell it today you would earn a total of 43,100 from holding Nampak or generate 1.03% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 98.41% |
Values | Daily Returns |
City Lodge Hotels vs. Nampak
Performance |
Timeline |
City Lodge Hotels |
Nampak |
City Lodge and Nampak Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with City Lodge and Nampak
The main advantage of trading using opposite City Lodge and Nampak positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if City Lodge 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.City Lodge vs. Afine Investments | City Lodge vs. Trematon Capital Investments | City Lodge vs. Safari Investments RSA | City Lodge vs. Bytes Technology |
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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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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