Correlation Between Sabvest Capital and Firstrand

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

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

Diversification Opportunities for Sabvest Capital and Firstrand

-0.64

Correlation Coefficient

Sabvest Capital  Firstrand

Excellent diversification

The 3 months correlation between Sabvest and Firstrand is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Sabvest Capital and Firstrand in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Firstrand 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 Firstrand. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Firstrand has no effect on the direction of Sabvest Capital i.e., Sabvest Capital and Firstrand go up and down completely randomly.

Pair Corralation between Sabvest Capital and Firstrand

Assuming the 90 days trading horizon Sabvest Capital is expected to generate 2.08 times less return on investment than Firstrand. In addition to that, Sabvest Capital is 1.38 times more volatile than Firstrand. It trades about 0.02 of its total potential returns per unit of risk. Firstrand is currently generating about 0.06 per unit of volatility. If you would invest  542,124  in Firstrand on September 4, 2024 and sell it today you would earn a total of  236,476  from holding Firstrand or generate 43.62% return on investment over 90 days.

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

Sabvest Capital  vs.  Firstrand

Sabvest Capital

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Sabvest Capital are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, Sabvest Capital exhibited solid returns over the last few months and may actually be approaching a breakup point.

Firstrand

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Firstrand has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Firstrand is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Sabvest Capital and Firstrand

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

The idea behind Sabvest Capital and Firstrand 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.