Correlation Between Trematon Capital and Netcare

Can any of the company-specific risk be diversified away by investing in both Trematon Capital and Netcare 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 Netcare 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 Netcare, you can compare the effects of market volatilities on Trematon Capital and Netcare 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 Netcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Trematon Capital and Netcare.

Diversification Opportunities for Trematon Capital and Netcare

0.64

Correlation Coefficient

Trematon Capital  Netcare

Poor diversification

The 3 months correlation between Trematon and Netcare is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Trematon Capital Investments and Netcare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Netcare 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 Netcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Netcare has no effect on the direction of Trematon Capital i.e., Trematon Capital and Netcare go up and down completely randomly.

Pair Corralation between Trematon Capital and Netcare

Assuming the 90 days trading horizon Trematon Capital Investments is expected to generate 4.4 times more return on investment than Netcare. However, Trematon Capital is 4.4 times more volatile than Netcare. It trades about 0.0 of its potential returns per unit of risk. Netcare is currently generating about -0.13 per unit of risk. If you would invest  22,000  in Trematon Capital Investments on December 4, 2024 and sell it today you would lose (2,000) from holding Trematon Capital Investments or give up 9.09% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.36%
Values	Daily Returns

Trematon Capital Investments  vs.  Netcare

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 rather sound technical and fundamental indicators, Trematon Capital is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Netcare

Risk-Adjusted Performance

Very Weak

Over the last 90 days Netcare 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 Netcare

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

The idea behind Trematon Capital Investments and Netcare 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.