Correlation Between Safari Investments and Gemfields
Can any of the company-specific risk be diversified away by investing in both Safari Investments and Gemfields 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 Safari Investments and Gemfields into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Safari Investments RSA and Gemfields Group, you can compare the effects of market volatilities on Safari Investments and Gemfields 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 Safari Investments with a short position of Gemfields. Check out your portfolio center. Please also check ongoing floating volatility patterns of Safari Investments and Gemfields.
Diversification Opportunities for Safari Investments and Gemfields
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Safari and Gemfields is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Safari Investments RSA and Gemfields Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gemfields Group and Safari Investments 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 Safari Investments RSA are associated (or correlated) with Gemfields. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gemfields Group has no effect on the direction of Safari Investments i.e., Safari Investments and Gemfields go up and down completely randomly.
Pair Corralation between Safari Investments and Gemfields
Assuming the 90 days trading horizon Safari Investments RSA is expected to generate 0.17 times more return on investment than Gemfields. However, Safari Investments RSA is 5.78 times less risky than Gemfields. It trades about 0.37 of its potential returns per unit of risk. Gemfields Group is currently generating about -0.15 per unit of risk. If you would invest 62,500 in Safari Investments RSA on September 24, 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 | Moves Against |
Strength | Insignificant |
Accuracy | 95.0% |
Values | Daily Returns |
Safari Investments RSA vs. Gemfields Group
Performance |
Timeline |
Safari Investments RSA |
Gemfields Group |
Safari Investments and Gemfields Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Safari Investments and Gemfields
The main advantage of trading using opposite Safari Investments and Gemfields positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Safari Investments position performs unexpectedly, Gemfields 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 Gemfields will offset losses from the drop in Gemfields' long position.Safari Investments vs. Growthpoint Properties | Safari Investments vs. Fortress Income | Safari Investments vs. Emira Property | Safari Investments vs. Dipula Income |
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Check out your portfolio center.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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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