Correlation Between Uwharrie Capital and Absa Group

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

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

Diversification Opportunities for Uwharrie Capital and Absa Group

0.4

Correlation Coefficient

Uwharrie Capital  Absa Group

Very weak diversification

The 3 months correlation between Uwharrie and Absa is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Uwharrie Capital Corp and Absa Group Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Absa Group Limited and Uwharrie 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 Uwharrie Capital Corp are associated (or correlated) with Absa Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Absa Group Limited has no effect on the direction of Uwharrie Capital i.e., Uwharrie Capital and Absa Group go up and down completely randomly.

Pair Corralation between Uwharrie Capital and Absa Group

Given the investment horizon of 90 days Uwharrie Capital Corp is expected to generate 2.33 times more return on investment than Absa Group. However, Uwharrie Capital is 2.33 times more volatile than Absa Group Limited. It trades about 0.1 of its potential returns per unit of risk. Absa Group Limited is currently generating about 0.09 per unit of risk. If you would invest  746.00  in Uwharrie Capital Corp on September 3, 2024 and sell it today you would earn a total of  94.00  from holding Uwharrie Capital Corp or generate 12.6% return on investment over 90 days.

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

Uwharrie Capital Corp  vs.  Absa Group Limited

Uwharrie Capital Corp

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Uwharrie Capital Corp are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak technical indicators, Uwharrie Capital may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Absa Group Limited

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Absa Group Limited are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Absa Group is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Uwharrie Capital and Absa Group

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

The idea behind Uwharrie Capital Corp and Absa Group Limited 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.