Correlation Between MEIKLES AFRICA and AFRICAN DISTILLERS

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

By analyzing existing cross correlation between MEIKLES AFRICA LIMITED and AFRICAN DISTILLERS LIMITED, you can compare the effects of market volatilities on MEIKLES AFRICA and AFRICAN DISTILLERS 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 MEIKLES AFRICA with a short position of AFRICAN DISTILLERS. Check out your portfolio center. Please also check ongoing floating volatility patterns of MEIKLES AFRICA and AFRICAN DISTILLERS.

Diversification Opportunities for MEIKLES AFRICA and AFRICAN DISTILLERS

0.0

Correlation Coefficient

MEIKLES AFRICA  AFRICAN DISTILLERS

Pay attention - limited upside

The 3 months correlation between MEIKLES and AFRICAN is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding MEIKLES AFRICA LIMITED and AFRICAN DISTILLERS LIMITED in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AFRICAN DISTILLERS and MEIKLES AFRICA 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 MEIKLES AFRICA LIMITED are associated (or correlated) with AFRICAN DISTILLERS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AFRICAN DISTILLERS has no effect on the direction of MEIKLES AFRICA i.e., MEIKLES AFRICA and AFRICAN DISTILLERS go up and down completely randomly.

Pair Corralation between MEIKLES AFRICA and AFRICAN DISTILLERS

If you would invest (100.00) in MEIKLES AFRICA LIMITED on December 21, 2024 and sell it today you would earn a total of  100.00  from holding MEIKLES AFRICA LIMITED or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

MEIKLES AFRICA LIMITED  vs.  AFRICAN DISTILLERS LIMITED

MEIKLES AFRICA

Risk-Adjusted Performance

Very Weak

Over the last 90 days MEIKLES AFRICA LIMITED has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward indicators, MEIKLES AFRICA is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

AFRICAN DISTILLERS

Risk-Adjusted Performance

Very Weak

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

Pair Trading with MEIKLES AFRICA and AFRICAN DISTILLERS

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

The idea behind MEIKLES AFRICA LIMITED and AFRICAN DISTILLERS LIMITED 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.