Correlation Between SOVEREIGN TRUST and AFRICAN ALLIANCE

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

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

Diversification Opportunities for SOVEREIGN TRUST and AFRICAN ALLIANCE

0.0

Correlation Coefficient

SOVEREIGN TRUST  AFRICAN ALLIANCE

Pay attention - limited upside

The 3 months correlation between SOVEREIGN and AFRICAN is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding SOVEREIGN TRUST INSURANCE and AFRICAN ALLIANCE INSURANCE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AFRICAN ALLIANCE INS and SOVEREIGN TRUST 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 SOVEREIGN TRUST INSURANCE are associated (or correlated) with AFRICAN ALLIANCE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AFRICAN ALLIANCE INS has no effect on the direction of SOVEREIGN TRUST i.e., SOVEREIGN TRUST and AFRICAN ALLIANCE go up and down completely randomly.

Pair Corralation between SOVEREIGN TRUST and AFRICAN ALLIANCE

If you would invest  80.00  in SOVEREIGN TRUST INSURANCE on December 2, 2024 and sell it today you would earn a total of  34.00  from holding SOVEREIGN TRUST INSURANCE or generate 42.5% return on investment over 90 days.

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

SOVEREIGN TRUST INSURANCE  vs.  AFRICAN ALLIANCE INSURANCE

SOVEREIGN TRUST INSURANCE

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in SOVEREIGN TRUST INSURANCE are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite fairly unfluctuating basic indicators, SOVEREIGN TRUST demonstrated solid returns over the last few months and may actually be approaching a breakup point.

AFRICAN ALLIANCE INS

Risk-Adjusted Performance

Very Weak

Over the last 90 days AFRICAN ALLIANCE INSURANCE has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, AFRICAN ALLIANCE 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 SOVEREIGN TRUST and AFRICAN ALLIANCE

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

The idea behind SOVEREIGN TRUST INSURANCE and AFRICAN ALLIANCE INSURANCE 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.