Correlation Between Netcare and Safari Investments

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

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

Diversification Opportunities for Netcare and Safari Investments

0.0

Correlation Coefficient

Netcare  Safari Investments

Pay attention - limited upside

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

Pair Corralation between Netcare and Safari Investments

If you would invest  62,500  in Safari Investments RSA on October 9, 2024 and sell it today you would earn a total of  5,000  from holding Safari Investments RSA or generate 8.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	2.63%
Values	Daily Returns

Netcare  vs.  Safari Investments RSA

Netcare

Risk-Adjusted Performance

0 of 100

Very Weak

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

Safari Investments RSA

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Safari Investments RSA are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Safari Investments exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Netcare and Safari Investments

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

The idea behind Netcare and Safari Investments RSA 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.