Correlation Between CONOIL PLC and CORONATION INSURANCE

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

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

Diversification Opportunities for CONOIL PLC and CORONATION INSURANCE

0.93

Correlation Coefficient

CONOIL PLC  CORONATION INSURANCE

Almost no diversification

The 3 months correlation between CONOIL and CORONATION is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding CONOIL PLC and CORONATION INSURANCE PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CORONATION INSURANCE PLC and CONOIL PLC 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 CONOIL PLC are associated (or correlated) with CORONATION INSURANCE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CORONATION INSURANCE PLC has no effect on the direction of CONOIL PLC i.e., CONOIL PLC and CORONATION INSURANCE go up and down completely randomly.

Pair Corralation between CONOIL PLC and CORONATION INSURANCE

Assuming the 90 days trading horizon CONOIL PLC is expected to generate 0.82 times more return on investment than CORONATION INSURANCE. However, CONOIL PLC is 1.22 times less risky than CORONATION INSURANCE. It trades about 0.41 of its potential returns per unit of risk. CORONATION INSURANCE PLC is currently generating about 0.22 per unit of risk. If you would invest  16,800  in CONOIL PLC on September 17, 2024 and sell it today you would earn a total of  21,920  from holding CONOIL PLC or generate 130.48% return on investment over 90 days.

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

CONOIL PLC  vs.  CORONATION INSURANCE PLC

CONOIL PLC

Risk-Adjusted Performance

31 of 100

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in CONOIL PLC are ranked lower than 31 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak forward indicators, CONOIL PLC sustained solid returns over the last few months and may actually be approaching a breakup point.

CORONATION INSURANCE PLC

Risk-Adjusted Performance

17 of 100

Solid

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

Pair Trading with CONOIL PLC and CORONATION INSURANCE

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

The idea behind CONOIL PLC and CORONATION INSURANCE PLC 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.