Correlation Between Sab Zenzele and Aveng

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

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

Diversification Opportunities for Sab Zenzele and Aveng

-0.67

Correlation Coefficient

Sab Zenzele  Aveng

Excellent diversification

The 3 months correlation between Sab and Aveng is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Sab Zenzele Kabili and Aveng in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aveng and Sab Zenzele 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 Sab Zenzele Kabili are associated (or correlated) with Aveng. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aveng has no effect on the direction of Sab Zenzele i.e., Sab Zenzele and Aveng go up and down completely randomly.

Pair Corralation between Sab Zenzele and Aveng

Assuming the 90 days trading horizon Sab Zenzele Kabili is expected to generate 1.87 times more return on investment than Aveng. However, Sab Zenzele is 1.87 times more volatile than Aveng. It trades about 0.02 of its potential returns per unit of risk. Aveng is currently generating about 0.0 per unit of risk. If you would invest  415,543  in Sab Zenzele Kabili on September 23, 2024 and sell it today you would lose (75,443) from holding Sab Zenzele Kabili or give up 18.16% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	99.8%
Values	Daily Returns

Sab Zenzele Kabili  vs.  Aveng

Sab Zenzele Kabili

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sab Zenzele Kabili 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.

Aveng

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Aveng are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Aveng exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sab Zenzele and Aveng

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

The idea behind Sab Zenzele Kabili and Aveng 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.