Correlation Between FG Annuities and Sanlam

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

By analyzing existing cross correlation between FG Annuities Life and Sanlam Ltd PK, you can compare the effects of market volatilities on FG Annuities and Sanlam 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 FG Annuities with a short position of Sanlam. Check out your portfolio center. Please also check ongoing floating volatility patterns of FG Annuities and Sanlam.

Diversification Opportunities for FG Annuities and Sanlam

-0.39

Correlation Coefficient

FG Annuities  Sanlam

Very good diversification

The 3 months correlation between FG Annuities and Sanlam is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding FG Annuities Life and Sanlam Ltd PK in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sanlam Ltd PK and FG Annuities 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 FG Annuities Life are associated (or correlated) with Sanlam. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sanlam Ltd PK has no effect on the direction of FG Annuities i.e., FG Annuities and Sanlam go up and down completely randomly.

Pair Corralation between FG Annuities and Sanlam

Allowing for the 90-day total investment horizon FG Annuities Life is expected to under-perform the Sanlam. In addition to that, FG Annuities is 1.77 times more volatile than Sanlam Ltd PK. It trades about -0.06 of its total potential returns per unit of risk. Sanlam Ltd PK is currently generating about 0.01 per unit of volatility. If you would invest  933.00  in Sanlam Ltd PK on December 30, 2024 and sell it today you would earn a total of  1.00  from holding Sanlam Ltd PK or generate 0.11% return on investment over 90 days.

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

FG Annuities Life  vs.  Sanlam Ltd PK

FG Annuities Life

Risk-Adjusted Performance

Very Weak

Over the last 90 days FG Annuities Life has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's technical and fundamental indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Sanlam Ltd PK

Risk-Adjusted Performance

Very Weak

Over the last 90 days Sanlam Ltd PK has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong fundamental indicators, Sanlam is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with FG Annuities and Sanlam

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

The idea behind FG Annuities Life and Sanlam Ltd PK 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.