Correlation Between Johcm Emerging and Barloworld

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

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

Diversification Opportunities for Johcm Emerging and Barloworld

-0.54

Correlation Coefficient

Johcm Emerging  Barloworld

Excellent diversification

The 3 months correlation between Johcm and Barloworld is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Johcm Emerging Markets and Barloworld Ltd ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Barloworld ADR and Johcm Emerging 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 Johcm Emerging Markets 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 Johcm Emerging i.e., Johcm Emerging and Barloworld go up and down completely randomly.

Pair Corralation between Johcm Emerging and Barloworld

Assuming the 90 days horizon Johcm Emerging Markets is expected to generate 0.19 times more return on investment than Barloworld. However, Johcm Emerging Markets is 5.14 times less risky than Barloworld. It trades about 0.04 of its potential returns per unit of risk. Barloworld Ltd ADR is currently generating about -0.04 per unit of risk. If you would invest  1,141  in Johcm Emerging Markets on December 1, 2024 and sell it today you would earn a total of  20.00  from holding Johcm Emerging Markets or generate 1.75% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	73.33%
Values	Daily Returns

Johcm Emerging Markets  vs.  Barloworld Ltd ADR

Johcm Emerging Markets

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Johcm Emerging Markets are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Johcm Emerging is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Barloworld ADR

Risk-Adjusted Performance

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 weak performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Johcm Emerging and Barloworld

The main advantage of trading using opposite Johcm Emerging and Barloworld positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Johcm Emerging 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 Johcm Emerging Markets 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.