Correlation Between Safari Investments and Hulamin

Can any of the company-specific risk be diversified away by investing in both Safari Investments and Hulamin 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 Hulamin 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 Hulamin, you can compare the effects of market volatilities on Safari Investments and Hulamin 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 Hulamin. Check out your portfolio center. Please also check ongoing floating volatility patterns of Safari Investments and Hulamin.

Diversification Opportunities for Safari Investments and Hulamin

-0.13

Correlation Coefficient

Safari Investments  Hulamin

Good diversification

The 3 months correlation between Safari and Hulamin is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Safari Investments RSA and Hulamin in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hulamin 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 Hulamin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hulamin has no effect on the direction of Safari Investments i.e., Safari Investments and Hulamin go up and down completely randomly.

Pair Corralation between Safari Investments and Hulamin

Assuming the 90 days trading horizon Safari Investments RSA is expected to generate 1.12 times more return on investment than Hulamin. However, Safari Investments is 1.12 times more volatile than Hulamin. It trades about 0.11 of its potential returns per unit of risk. Hulamin is currently generating about -0.05 per unit of risk. If you would invest  53,500  in Safari Investments RSA on September 15, 2024 and sell it today you would earn a total of  9,500  from holding Safari Investments RSA or generate 17.76% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	96.92%
Values	Daily Returns

Safari Investments RSA  vs.  Hulamin

Safari Investments RSA

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Safari Investments RSA are ranked lower than 8 (%) 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.

Hulamin

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hulamin has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Safari Investments and Hulamin

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

The idea behind Safari Investments RSA and Hulamin 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 Transaction History module to view history of all your transactions and understand their impact on performance.