Correlation Between AfroCentric Investment and Investec Limited
Can any of the company-specific risk be diversified away by investing in both AfroCentric Investment and Investec Limited 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 AfroCentric Investment and Investec Limited into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AfroCentric Investment Corp and Investec Limited NON, you can compare the effects of market volatilities on AfroCentric Investment and Investec Limited 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 AfroCentric Investment with a short position of Investec Limited. Check out your portfolio center. Please also check ongoing floating volatility patterns of AfroCentric Investment and Investec Limited.
Diversification Opportunities for AfroCentric Investment and Investec Limited
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between AfroCentric and Investec is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding AfroCentric Investment Corp and Investec Limited NON in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Investec Limited NON and AfroCentric Investment 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 AfroCentric Investment Corp are associated (or correlated) with Investec Limited. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Investec Limited NON has no effect on the direction of AfroCentric Investment i.e., AfroCentric Investment and Investec Limited go up and down completely randomly.
Pair Corralation between AfroCentric Investment and Investec Limited
Assuming the 90 days trading horizon AfroCentric Investment Corp is expected to under-perform the Investec Limited. In addition to that, AfroCentric Investment is 6.45 times more volatile than Investec Limited NON. It trades about -0.23 of its total potential returns per unit of risk. Investec Limited NON is currently generating about -0.13 per unit of volatility. If you would invest 938,000 in Investec Limited NON on September 4, 2024 and sell it today you would lose (23,000) from holding Investec Limited NON or give up 2.45% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
AfroCentric Investment Corp vs. Investec Limited NON
Performance |
| Timeline |
| AfroCentric Investment |
| Investec Limited NON |
AfroCentric Investment and Investec Limited Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AfroCentric Investment and Investec Limited
The main advantage of trading using opposite AfroCentric Investment and Investec Limited positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AfroCentric Investment position performs unexpectedly, Investec Limited 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 Investec Limited will offset losses from the drop in Investec Limited's long position.| AfroCentric Investment vs. Deneb Investments | AfroCentric Investment vs. Lesaka Technologies | AfroCentric Investment vs. Advtech | AfroCentric Investment vs. RCL Foods |
| Investec Limited vs. Frontier Transport Holdings | Investec Limited vs. Bytes Technology | Investec Limited vs. Brimstone Investment | Investec Limited vs. AfroCentric Investment Corp |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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