Correlation Between Hall Of and Barloworld

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

By analyzing existing cross correlation between Hall of Fame and Barloworld Ltd ADR, you can compare the effects of market volatilities on Hall Of and Barloworld 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 Hall Of with a short position of Barloworld. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hall Of and Barloworld.

Diversification Opportunities for Hall Of and Barloworld

0.03

Correlation Coefficient

Hall Of  Barloworld

Significant diversification

The 3 months correlation between Hall and Barloworld is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Hall of Fame and Barloworld Ltd ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Barloworld ADR and Hall Of 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 Hall of Fame are associated (or correlated) with Barloworld. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Barloworld ADR has no effect on the direction of Hall Of i.e., Hall Of and Barloworld go up and down completely randomly.

Pair Corralation between Hall Of and Barloworld

Assuming the 90 days horizon Hall of Fame is expected to generate 5.73 times more return on investment than Barloworld. However, Hall Of is 5.73 times more volatile than Barloworld Ltd ADR. It trades about 0.11 of its potential returns per unit of risk. Barloworld Ltd ADR is currently generating about 0.0 per unit of risk. If you would invest  1.04  in Hall of Fame on August 31, 2024 and sell it today you would lose (0.25) from holding Hall of Fame or give up 24.04% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	92.06%
Values	Daily Returns

Hall of Fame  vs.  Barloworld Ltd ADR

Hall of Fame

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Hall of Fame are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Hall Of showed solid returns over the last few months and may actually be approaching a breakup point.

Barloworld ADR

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Hall Of and Barloworld

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

The idea behind Hall of Fame and Barloworld Ltd ADR 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.