Correlation Between Safari Investments and Kore Potash

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

Diversification Opportunities for Safari Investments and Kore Potash

0.38

Correlation Coefficient

Safari Investments  Kore Potash

Weak diversification

The 3 months correlation between Safari and Kore is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Safari Investments RSA and Kore Potash Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kore Potash Plc 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 Kore Potash. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kore Potash Plc has no effect on the direction of Safari Investments i.e., Safari Investments and Kore Potash go up and down completely randomly.

Pair Corralation between Safari Investments and Kore Potash

Assuming the 90 days trading horizon Safari Investments RSA is expected to generate 0.52 times more return on investment than Kore Potash. However, Safari Investments RSA is 1.93 times less risky than Kore Potash. It trades about 0.11 of its potential returns per unit of risk. Kore Potash Plc is currently generating about 0.03 per unit of risk. If you would invest  53,500  in Safari Investments RSA on September 16, 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 Together
Strength	Very Weak
Accuracy	96.92%
Values	Daily Returns

Safari Investments RSA  vs.  Kore Potash Plc

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.

Kore Potash Plc

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Kore Potash Plc are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Kore Potash may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Safari Investments and Kore Potash

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

The idea behind Safari Investments RSA and Kore Potash Plc 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.

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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.