Correlation Between ABSA Bank and Universal Partners
Can any of the company-specific risk be diversified away by investing in both ABSA Bank and Universal Partners 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 ABSA Bank and Universal Partners into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ABSA Bank Limited and Universal Partners, you can compare the effects of market volatilities on ABSA Bank and Universal Partners 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 ABSA Bank with a short position of Universal Partners. Check out your portfolio center. Please also check ongoing floating volatility patterns of ABSA Bank and Universal Partners.
Diversification Opportunities for ABSA Bank and Universal Partners
-0.63 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between ABSA and Universal is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding ABSA Bank Limited and Universal Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Universal Partners and ABSA Bank 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 ABSA Bank Limited are associated (or correlated) with Universal Partners. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Universal Partners has no effect on the direction of ABSA Bank i.e., ABSA Bank and Universal Partners go up and down completely randomly.
Pair Corralation between ABSA Bank and Universal Partners
Assuming the 90 days trading horizon ABSA Bank Limited is expected to generate 0.3 times more return on investment than Universal Partners. However, ABSA Bank Limited is 3.38 times less risky than Universal Partners. It trades about 0.07 of its potential returns per unit of risk. Universal Partners is currently generating about -0.07 per unit of risk. If you would invest 8,555,000 in ABSA Bank Limited on September 12, 2024 and sell it today you would earn a total of 105,200 from holding ABSA Bank Limited or generate 1.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
ABSA Bank Limited vs. Universal Partners
Performance |
| Timeline |
| ABSA Bank Limited |
| Universal Partners |
ABSA Bank and Universal Partners Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ABSA Bank and Universal Partners
The main advantage of trading using opposite ABSA Bank and Universal Partners positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ABSA Bank position performs unexpectedly, Universal Partners 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 Universal Partners will offset losses from the drop in Universal Partners' long position.| ABSA Bank vs. City Lodge Hotels | ABSA Bank vs. eMedia Holdings Limited | ABSA Bank vs. Astral Foods | ABSA Bank vs. Reinet Investments SCA |
| Universal Partners vs. MC Mining | Universal Partners vs. ABSA Bank Limited | Universal Partners vs. Advtech | Universal Partners vs. Trematon Capital Investments |
Check out your portfolio center.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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
Other Complementary Tools
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum | |
| Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites | |
| Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
| Share Portfolio Track or share privately all of your investments from the convenience of any device |