Correlation Between Sebata Holdings and Pepkor Holdings

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

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

Diversification Opportunities for Sebata Holdings and Pepkor Holdings

-0.1

Correlation Coefficient

Sebata Holdings  Pepkor Holdings

Good diversification

The 3 months correlation between Sebata and Pepkor is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Sebata Holdings and Pepkor Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pepkor Holdings and Sebata Holdings 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 Sebata Holdings are associated (or correlated) with Pepkor Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pepkor Holdings has no effect on the direction of Sebata Holdings i.e., Sebata Holdings and Pepkor Holdings go up and down completely randomly.

Pair Corralation between Sebata Holdings and Pepkor Holdings

Assuming the 90 days trading horizon Sebata Holdings is expected to generate 52.32 times more return on investment than Pepkor Holdings. However, Sebata Holdings is 52.32 times more volatile than Pepkor Holdings. It trades about 0.08 of its potential returns per unit of risk. Pepkor Holdings is currently generating about 0.04 per unit of risk. If you would invest  21,715  in Sebata Holdings on October 15, 2024 and sell it today you would lose (11,215) from holding Sebata Holdings or give up 51.65% of portfolio value over 90 days.

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

Sebata Holdings  vs.  Pepkor Holdings

Sebata Holdings

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Sebata Holdings are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, Sebata Holdings is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pepkor Holdings

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Pepkor Holdings are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Pepkor Holdings exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sebata Holdings and Pepkor Holdings

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

The idea behind Sebata Holdings and Pepkor Holdings 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.