Correlation Between Trematon Capital and Nedbank

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

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

Diversification Opportunities for Trematon Capital and Nedbank

0.27

Correlation Coefficient

Trematon Capital  Nedbank

Modest diversification

The 3 months correlation between Trematon and Nedbank is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Trematon Capital Investments and Nedbank Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nedbank Group and Trematon 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 Trematon Capital Investments are associated (or correlated) with Nedbank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nedbank Group has no effect on the direction of Trematon Capital i.e., Trematon Capital and Nedbank go up and down completely randomly.

Pair Corralation between Trematon Capital and Nedbank

Assuming the 90 days trading horizon Trematon Capital Investments is expected to under-perform the Nedbank. In addition to that, Trematon Capital is 3.14 times more volatile than Nedbank Group. It trades about -0.09 of its total potential returns per unit of risk. Nedbank Group is currently generating about -0.1 per unit of volatility. If you would invest  2,828,900  in Nedbank Group on December 24, 2024 and sell it today you would lose (236,600) from holding Nedbank Group or give up 8.36% of portfolio value over 90 days.

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

Trematon Capital Investments  vs.  Nedbank Group

Trematon Capital Inv

Risk-Adjusted Performance

Very Weak

Over the last 90 days Trematon Capital Investments has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Nedbank Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days Nedbank Group 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 Trematon Capital and Nedbank

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

The idea behind Trematon Capital Investments and Nedbank Group 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.