Correlation Between Sabvest Capital and Nampak

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

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

Diversification Opportunities for Sabvest Capital and Nampak

-0.38

Correlation Coefficient

Sabvest Capital  Nampak

Very good diversification

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

Pair Corralation between Sabvest Capital and Nampak

Assuming the 90 days trading horizon Sabvest Capital is expected to generate 42.39 times less return on investment than Nampak. But when comparing it to its historical volatility, Sabvest Capital is 21.66 times less risky than Nampak. It trades about 0.02 of its potential returns per unit of risk. Nampak is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  2,325,000  in Nampak on October 5, 2024 and sell it today you would earn a total of  1,775,000  from holding Nampak or generate 76.34% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.78%
Values	Daily Returns

Sabvest Capital  vs.  Nampak

Sabvest Capital

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Sabvest Capital are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Sabvest Capital may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Nampak

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nampak 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 Sabvest Capital and Nampak

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

The idea behind Sabvest Capital and Nampak 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.