Correlation Between Growthpoint Properties and Absa Multi

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

By analyzing existing cross correlation between Growthpoint Properties and Absa Multi Managed, you can compare the effects of market volatilities on Growthpoint Properties and Absa Multi 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 Absa Multi. Check out your portfolio center. Please also check ongoing floating volatility patterns of Growthpoint Properties and Absa Multi.

Diversification Opportunities for Growthpoint Properties and Absa Multi

-0.28

Correlation Coefficient

Growthpoint Properties  Absa Multi

Very good diversification

The 3 months correlation between Growthpoint and Absa is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Growthpoint Properties and Absa Multi Managed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Absa Multi Managed 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 Absa Multi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Absa Multi Managed has no effect on the direction of Growthpoint Properties i.e., Growthpoint Properties and Absa Multi go up and down completely randomly.

Pair Corralation between Growthpoint Properties and Absa Multi

Assuming the 90 days trading horizon Growthpoint Properties is expected to generate 1.16 times less return on investment than Absa Multi. In addition to that, Growthpoint Properties is 3.33 times more volatile than Absa Multi Managed. It trades about 0.02 of its total potential returns per unit of risk. Absa Multi Managed is currently generating about 0.08 per unit of volatility. If you would invest  220.00  in Absa Multi Managed on October 10, 2024 and sell it today you would earn a total of  38.00  from holding Absa Multi Managed or generate 17.27% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.59%
Values	Daily Returns

Growthpoint Properties  vs.  Absa Multi Managed

Growthpoint Properties

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Growthpoint Properties has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Growthpoint Properties is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Absa Multi Managed

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Absa Multi Managed are ranked lower than 5 (%) of all funds and portfolios of funds over the last 90 days. In spite of comparatively stable basic indicators, Absa Multi is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Growthpoint Properties and Absa Multi

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

The idea behind Growthpoint Properties and Absa Multi Managed 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.