Correlation Between STAR AFRICA and MEIKLES AFRICA

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

By analyzing existing cross correlation between STAR AFRICA PORATION and MEIKLES AFRICA LIMITED, you can compare the effects of market volatilities on STAR AFRICA and MEIKLES AFRICA 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 STAR AFRICA with a short position of MEIKLES AFRICA. Check out your portfolio center. Please also check ongoing floating volatility patterns of STAR AFRICA and MEIKLES AFRICA.

Diversification Opportunities for STAR AFRICA and MEIKLES AFRICA

0.0

Correlation Coefficient

STAR AFRICA  MEIKLES AFRICA

Pay attention - limited upside

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

Pair Corralation between STAR AFRICA and MEIKLES AFRICA

If you would invest  220.00  in STAR AFRICA PORATION on December 20, 2024 and sell it today you would earn a total of  191.00  from holding STAR AFRICA PORATION or generate 86.82% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	1.67%
Values	Daily Returns

STAR AFRICA PORATION  vs.  MEIKLES AFRICA LIMITED

STAR AFRICA PORATION

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in STAR AFRICA PORATION are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak fundamental indicators, STAR AFRICA showed solid returns over the last few months and may actually be approaching a breakup point.

MEIKLES AFRICA

Risk-Adjusted Performance

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.

Pair Trading with STAR AFRICA and MEIKLES AFRICA

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

The idea behind STAR AFRICA PORATION and MEIKLES AFRICA 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.