Correlation Between Southern Rubber and Camau Trading

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

By analyzing existing cross correlation between Southern Rubber Industry and Camau Trading JSC, you can compare the effects of market volatilities on Southern Rubber and Camau Trading 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 Southern Rubber with a short position of Camau Trading. Check out your portfolio center. Please also check ongoing floating volatility patterns of Southern Rubber and Camau Trading.

Diversification Opportunities for Southern Rubber and Camau Trading

-0.51

Correlation Coefficient

Southern Rubber  Camau Trading

Excellent diversification

The 3 months correlation between Southern and Camau is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Southern Rubber Industry and Camau Trading JSC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Camau Trading JSC and Southern Rubber 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 Southern Rubber Industry are associated (or correlated) with Camau Trading. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Camau Trading JSC has no effect on the direction of Southern Rubber i.e., Southern Rubber and Camau Trading go up and down completely randomly.

Pair Corralation between Southern Rubber and Camau Trading

Assuming the 90 days trading horizon Southern Rubber Industry is expected to generate 0.77 times more return on investment than Camau Trading. However, Southern Rubber Industry is 1.31 times less risky than Camau Trading. It trades about 0.32 of its potential returns per unit of risk. Camau Trading JSC is currently generating about 0.03 per unit of risk. If you would invest  1,085,000  in Southern Rubber Industry on October 6, 2024 and sell it today you would earn a total of  465,000  from holding Southern Rubber Industry or generate 42.86% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	53.49%
Values	Daily Returns

Southern Rubber Industry  vs.  Camau Trading JSC

Southern Rubber Industry

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Southern Rubber Industry are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating primary indicators, Southern Rubber displayed solid returns over the last few months and may actually be approaching a breakup point.

Camau Trading JSC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Camau Trading JSC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Camau Trading is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Southern Rubber and Camau Trading

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

The idea behind Southern Rubber Industry and Camau Trading JSC 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.