Correlation Between Deneb Investments and Firstrand

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

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

Diversification Opportunities for Deneb Investments and Firstrand

-0.69

Correlation Coefficient

Deneb Investments  Firstrand

Excellent diversification

The 3 months correlation between Deneb and Firstrand is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Deneb Investments and Firstrand in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Firstrand and Deneb Investments 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 Deneb Investments are associated (or correlated) with Firstrand. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Firstrand has no effect on the direction of Deneb Investments i.e., Deneb Investments and Firstrand go up and down completely randomly.

Pair Corralation between Deneb Investments and Firstrand

Assuming the 90 days trading horizon Deneb Investments is expected to under-perform the Firstrand. In addition to that, Deneb Investments is 1.91 times more volatile than Firstrand. It trades about -0.01 of its total potential returns per unit of risk. Firstrand is currently generating about 0.06 per unit of volatility. If you would invest  742,488  in Firstrand on September 14, 2024 and sell it today you would earn a total of  71,412  from holding Firstrand or generate 9.62% return on investment over 90 days.

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

Deneb Investments  vs.  Firstrand

Deneb Investments

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Deneb Investments 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, Deneb Investments is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Firstrand

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Firstrand 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, Firstrand is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Deneb Investments and Firstrand

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

The idea behind Deneb Investments and Firstrand 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.