Correlation Between Absa Group and Aozora Bank
Can any of the company-specific risk be diversified away by investing in both Absa Group and Aozora Bank 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 Group and Aozora Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Absa Group Ltd and Aozora Bank, you can compare the effects of market volatilities on Absa Group and Aozora Bank 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 Group with a short position of Aozora Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Absa Group and Aozora Bank.
Diversification Opportunities for Absa Group and Aozora Bank
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Absa and Aozora is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Absa Group Ltd and Aozora Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aozora Bank and Absa Group 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 Group Ltd are associated (or correlated) with Aozora Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aozora Bank has no effect on the direction of Absa Group i.e., Absa Group and Aozora Bank go up and down completely randomly.
Pair Corralation between Absa Group and Aozora Bank
If you would invest 1,989 in Aozora Bank on November 7, 2024 and sell it today you would earn a total of 0.00 from holding Aozora Bank or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 4.76% |
| Values | Daily Returns |
Absa Group Ltd vs. Aozora Bank
Performance |
| Timeline |
| Absa Group |
| Aozora Bank |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Absa Group and Aozora Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Absa Group and Aozora Bank
The main advantage of trading using opposite Absa Group and Aozora Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Absa Group position performs unexpectedly, Aozora Bank 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 Aozora Bank will offset losses from the drop in Aozora Bank's long position.| Absa Group vs. Andover Bancorp | Absa Group vs. Aozora Bank Ltd | Absa Group vs. Credit Agricole SA | Absa Group vs. Absa Group Limited |
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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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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