Correlation Between Tsogo Sun and Trellidor Holdings

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

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

Diversification Opportunities for Tsogo Sun and Trellidor Holdings

0.88

Correlation Coefficient

Tsogo Sun  Trellidor Holdings

Very poor diversification

The 3 months correlation between Tsogo and Trellidor is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Tsogo Sun and Trellidor Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Trellidor Holdings and Tsogo Sun 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 Tsogo Sun are associated (or correlated) with Trellidor Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Trellidor Holdings has no effect on the direction of Tsogo Sun i.e., Tsogo Sun and Trellidor Holdings go up and down completely randomly.

Pair Corralation between Tsogo Sun and Trellidor Holdings

Assuming the 90 days trading horizon Tsogo Sun is expected to under-perform the Trellidor Holdings. But the stock apears to be less risky and, when comparing its historical volatility, Tsogo Sun is 1.39 times less risky than Trellidor Holdings. The stock trades about -0.18 of its potential returns per unit of risk. The Trellidor Holdings is currently generating about -0.07 of returns per unit of risk over similar time horizon. If you would invest  18,300  in Trellidor Holdings on October 23, 2024 and sell it today you would lose (2,100) from holding Trellidor Holdings or give up 11.48% of portfolio value over 90 days.

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

Tsogo Sun  vs.  Trellidor Holdings

Tsogo Sun

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Tsogo Sun 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 February 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Trellidor Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Trellidor Holdings 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 Tsogo Sun and Trellidor Holdings

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

The idea behind Tsogo Sun and Trellidor 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.

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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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.