Correlation Between MEIKLES AFRICA and CAFCA

Can any of the company-specific risk be diversified away by investing in both MEIKLES AFRICA and CAFCA 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 CAFCA 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 CAFCA LIMITED, you can compare the effects of market volatilities on MEIKLES AFRICA and CAFCA 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 CAFCA. Check out your portfolio center. Please also check ongoing floating volatility patterns of MEIKLES AFRICA and CAFCA.

Diversification Opportunities for MEIKLES AFRICA and CAFCA

0.0

Correlation Coefficient

MEIKLES AFRICA  CAFCA

Pay attention - limited upside

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

Pair Corralation between MEIKLES AFRICA and CAFCA

If you would invest  205,000  in CAFCA LIMITED on October 12, 2024 and sell it today you would earn a total of  0.00  from holding CAFCA LIMITED or generate 0.0% 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.  CAFCA LIMITED

MEIKLES AFRICA

Risk-Adjusted Performance

0 of 100

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.

CAFCA LIMITED

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in CAFCA LIMITED are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of fairly inconsistent fundamental indicators, CAFCA showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with MEIKLES AFRICA and CAFCA

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

The idea behind MEIKLES AFRICA LIMITED and CAFCA 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.