Correlation Between Pepkor Holdings and Sab Zenzele

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

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

Diversification Opportunities for Pepkor Holdings and Sab Zenzele

-0.29

Correlation Coefficient

Pepkor Holdings  Sab Zenzele

Very good diversification

The 3 months correlation between Pepkor and Sab is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Pepkor Holdings and Sab Zenzele Kabili in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sab Zenzele Kabili and Pepkor Holdings 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 Pepkor Holdings are associated (or correlated) with Sab Zenzele. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sab Zenzele Kabili has no effect on the direction of Pepkor Holdings i.e., Pepkor Holdings and Sab Zenzele go up and down completely randomly.

Pair Corralation between Pepkor Holdings and Sab Zenzele

Assuming the 90 days trading horizon Pepkor Holdings is expected to under-perform the Sab Zenzele. But the stock apears to be less risky and, when comparing its historical volatility, Pepkor Holdings is 7.28 times less risky than Sab Zenzele. The stock trades about -0.19 of its potential returns per unit of risk. The Sab Zenzele Kabili is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  380,200  in Sab Zenzele Kabili on October 13, 2024 and sell it today you would lose (30,200) from holding Sab Zenzele Kabili or give up 7.94% of portfolio value over 90 days.

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

Pepkor Holdings  vs.  Sab Zenzele Kabili

Pepkor Holdings

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Pepkor Holdings are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Pepkor Holdings exhibited solid returns over the last few months and may actually be approaching a breakup point.

Sab Zenzele Kabili

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Pepkor Holdings and Sab Zenzele

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

The idea behind Pepkor Holdings and Sab Zenzele Kabili 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.