Correlation Between Nedbank and Telemasters Holdings

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

By analyzing existing cross correlation between Nedbank Group and Telemasters Holdings, you can compare the effects of market volatilities on Nedbank and Telemasters Holdings 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 Nedbank with a short position of Telemasters Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nedbank and Telemasters Holdings.

Diversification Opportunities for Nedbank and Telemasters Holdings

-0.21

Correlation Coefficient

Nedbank  Telemasters Holdings

Very good diversification

The 3 months correlation between Nedbank and Telemasters is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Nedbank Group and Telemasters Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Telemasters Holdings and Nedbank 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 Nedbank Group are associated (or correlated) with Telemasters Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Telemasters Holdings has no effect on the direction of Nedbank i.e., Nedbank and Telemasters Holdings go up and down completely randomly.

Pair Corralation between Nedbank and Telemasters Holdings

If you would invest  10,000  in Telemasters Holdings on October 12, 2024 and sell it today you would earn a total of  0.00  from holding Telemasters Holdings or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Nedbank Group  vs.  Telemasters Holdings

Nedbank Group

Risk-Adjusted Performance

0 of 100

Very Weak

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

Telemasters Holdings

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Telemasters Holdings are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, Telemasters Holdings is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Nedbank and Telemasters Holdings

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

The idea behind Nedbank Group and Telemasters Holdings 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.