Correlation Between Growthpoint Properties and Coronation Capital

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

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

Diversification Opportunities for Growthpoint Properties and Coronation Capital

-0.09

Correlation Coefficient

Growthpoint Properties  Coronation Capital

Good diversification

The 3 months correlation between Growthpoint and Coronation is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Growthpoint Properties and Coronation Capital Plus in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coronation Capital Plus and Growthpoint Properties 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 Growthpoint Properties are associated (or correlated) with Coronation Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Coronation Capital Plus has no effect on the direction of Growthpoint Properties i.e., Growthpoint Properties and Coronation Capital go up and down completely randomly.

Pair Corralation between Growthpoint Properties and Coronation Capital

Assuming the 90 days trading horizon Growthpoint Properties is expected to generate 2.71 times more return on investment than Coronation Capital. However, Growthpoint Properties is 2.71 times more volatile than Coronation Capital Plus. It trades about 0.02 of its potential returns per unit of risk. Coronation Capital Plus is currently generating about 0.04 per unit of risk. If you would invest  128,100  in Growthpoint Properties on December 29, 2024 and sell it today you would earn a total of  1,400  from holding Growthpoint Properties or generate 1.09% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Growthpoint Properties  vs.  Coronation Capital Plus

Growthpoint Properties

Risk-Adjusted Performance

Weak

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

Coronation Capital Plus

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Coronation Capital Plus are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. Despite fairly strong basic indicators, Coronation Capital is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Growthpoint Properties and Coronation Capital

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

The idea behind Growthpoint Properties and Coronation Capital Plus 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.