Correlation Between Sabvest Capital and Investec Limited

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

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

Diversification Opportunities for Sabvest Capital and Investec Limited

0.18

Correlation Coefficient

Sabvest Capital  Investec Limited

Average diversification

The 3 months correlation between Sabvest and Investec is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Sabvest Capital and Investec Limited NON in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Investec Limited NON 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 Investec Limited. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Investec Limited NON has no effect on the direction of Sabvest Capital i.e., Sabvest Capital and Investec Limited go up and down completely randomly.

Pair Corralation between Sabvest Capital and Investec Limited

Assuming the 90 days trading horizon Sabvest Capital is expected to generate 1.96 times less return on investment than Investec Limited. In addition to that, Sabvest Capital is 2.85 times more volatile than Investec Limited NON. It trades about 0.01 of its total potential returns per unit of risk. Investec Limited NON is currently generating about 0.06 per unit of volatility. If you would invest  915,000  in Investec Limited NON on December 2, 2024 and sell it today you would earn a total of  22,500  from holding Investec Limited NON or generate 2.46% return on investment over 90 days.

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

Sabvest Capital  vs.  Investec Limited NON

Sabvest Capital

Risk-Adjusted Performance

Very Weak

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

Investec Limited NON

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Investec Limited NON are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Investec Limited is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Sabvest Capital and Investec Limited

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

The idea behind Sabvest Capital and Investec Limited NON 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.