Correlation Between Sabvest Capital and Absa Multi

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

By analyzing existing cross correlation between Sabvest Capital and Absa Multi Managed, you can compare the effects of market volatilities on Sabvest Capital and Absa Multi 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 Sabvest Capital with a short position of Absa Multi. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sabvest Capital and Absa Multi.

Diversification Opportunities for Sabvest Capital and Absa Multi

0.67

Correlation Coefficient

Sabvest Capital  Absa Multi

Poor diversification

The 3 months correlation between Sabvest and Absa is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Sabvest Capital and Absa Multi Managed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Absa Multi Managed and Sabvest Capital 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 Sabvest Capital are associated (or correlated) with Absa Multi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Absa Multi Managed has no effect on the direction of Sabvest Capital i.e., Sabvest Capital and Absa Multi go up and down completely randomly.

Pair Corralation between Sabvest Capital and Absa Multi

Assuming the 90 days trading horizon Sabvest Capital is expected to generate 6.6 times more return on investment than Absa Multi. However, Sabvest Capital is 6.6 times more volatile than Absa Multi Managed. It trades about 0.08 of its potential returns per unit of risk. Absa Multi Managed is currently generating about 0.08 per unit of risk. If you would invest  830,000  in Sabvest Capital on October 25, 2024 and sell it today you would earn a total of  96,100  from holding Sabvest Capital or generate 11.58% return on investment over 90 days.

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

Sabvest Capital  vs.  Absa Multi Managed

Sabvest Capital

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Sabvest Capital are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Sabvest Capital exhibited solid returns over the last few months and may actually be approaching a breakup point.

Absa Multi Managed

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Absa Multi Managed are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. Even with relatively steady basic indicators, Absa Multi is not utilizing all of its potentials. The current stock price chaos, may contribute to medium-term losses for the stakeholders.

Pair Trading with Sabvest Capital and Absa Multi

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

The idea behind Sabvest Capital and Absa Multi Managed 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.