Correlation Between CORONATION INSURANCE and C I

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

By analyzing existing cross correlation between CORONATION INSURANCE PLC and C I LEASING, you can compare the effects of market volatilities on CORONATION INSURANCE and C I 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 CORONATION INSURANCE with a short position of C I. Check out your portfolio center. Please also check ongoing floating volatility patterns of CORONATION INSURANCE and C I.

Diversification Opportunities for CORONATION INSURANCE and C I

0.1

Correlation Coefficient

CORONATION INSURANCE  C I

Average diversification

The 3 months correlation between CORONATION and CILEASING is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding CORONATION INSURANCE PLC and C I LEASING in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on C I LEASING and CORONATION INSURANCE 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 CORONATION INSURANCE PLC are associated (or correlated) with C I. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of C I LEASING has no effect on the direction of CORONATION INSURANCE i.e., CORONATION INSURANCE and C I go up and down completely randomly.

Pair Corralation between CORONATION INSURANCE and C I

Assuming the 90 days trading horizon CORONATION INSURANCE PLC is expected to generate 1.27 times more return on investment than C I. However, CORONATION INSURANCE is 1.27 times more volatile than C I LEASING. It trades about 0.04 of its potential returns per unit of risk. C I LEASING is currently generating about 0.02 per unit of risk. If you would invest  205.00  in CORONATION INSURANCE PLC on December 29, 2024 and sell it today you would earn a total of  13.00  from holding CORONATION INSURANCE PLC or generate 6.34% return on investment over 90 days.

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

CORONATION INSURANCE PLC  vs.  C I LEASING

CORONATION INSURANCE PLC

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in CORONATION INSURANCE PLC are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly inconsistent forward indicators, CORONATION INSURANCE showed solid returns over the last few months and may actually be approaching a breakup point.

C I LEASING

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in C I LEASING are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong basic indicators, C I is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with CORONATION INSURANCE and C I

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

The idea behind CORONATION INSURANCE PLC and C I LEASING 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.