Correlation Between PEPKOR and Sun Art

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

By analyzing existing cross correlation between PEPKOR LTD and Sun Art Retail, you can compare the effects of market volatilities on PEPKOR and Sun Art 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 with a short position of Sun Art. Check out your portfolio center. Please also check ongoing floating volatility patterns of PEPKOR and Sun Art.

Diversification Opportunities for PEPKOR and Sun Art

0.43

Correlation Coefficient

PEPKOR  Sun Art

Very weak diversification

The 3 months correlation between PEPKOR and Sun is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding PEPKOR LTD and Sun Art Retail in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sun Art Retail and PEPKOR 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 LTD are associated (or correlated) with Sun Art. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sun Art Retail has no effect on the direction of PEPKOR i.e., PEPKOR and Sun Art go up and down completely randomly.

Pair Corralation between PEPKOR and Sun Art

Assuming the 90 days trading horizon PEPKOR LTD is expected to under-perform the Sun Art. But the stock apears to be less risky and, when comparing its historical volatility, PEPKOR LTD is 7.32 times less risky than Sun Art. The stock trades about -0.03 of its potential returns per unit of risk. The Sun Art Retail is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  13.00  in Sun Art Retail on October 10, 2024 and sell it today you would earn a total of  9.00  from holding Sun Art Retail or generate 69.23% return on investment over 90 days.

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

PEPKOR LTD  vs.  Sun Art Retail

PEPKOR LTD

Risk-Adjusted Performance

10 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in PEPKOR LTD are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, PEPKOR reported solid returns over the last few months and may actually be approaching a breakup point.

Sun Art Retail

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Sun Art Retail are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Sun Art reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with PEPKOR and Sun Art

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

The idea behind PEPKOR LTD and Sun Art Retail 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.