Correlation Between BRITISH AMERICAN and ABSA NEW
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By analyzing existing cross correlation between BRITISH AMERICAN TOBACCO and ABSA NEW GOLD, you can compare the effects of market volatilities on BRITISH AMERICAN and ABSA NEW 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 BRITISH AMERICAN with a short position of ABSA NEW. Check out your portfolio center. Please also check ongoing floating volatility patterns of BRITISH AMERICAN and ABSA NEW.
Diversification Opportunities for BRITISH AMERICAN and ABSA NEW
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between BRITISH and ABSA is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding BRITISH AMERICAN TOBACCO and ABSA NEW GOLD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ABSA NEW GOLD and BRITISH AMERICAN 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 BRITISH AMERICAN TOBACCO are associated (or correlated) with ABSA NEW. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ABSA NEW GOLD has no effect on the direction of BRITISH AMERICAN i.e., BRITISH AMERICAN and ABSA NEW go up and down completely randomly.
Pair Corralation between BRITISH AMERICAN and ABSA NEW
Assuming the 90 days trading horizon BRITISH AMERICAN TOBACCO is expected to under-perform the ABSA NEW. In addition to that, BRITISH AMERICAN is 1.06 times more volatile than ABSA NEW GOLD. It trades about -0.05 of its total potential returns per unit of risk. ABSA NEW GOLD is currently generating about 0.07 per unit of volatility. If you would invest 253,000 in ABSA NEW GOLD on August 31, 2024 and sell it today you would earn a total of 69,000 from holding ABSA NEW GOLD or generate 27.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
BRITISH AMERICAN TOBACCO vs. ABSA NEW GOLD
Performance |
| Timeline |
| BRITISH AMERICAN TOBACCO |
| ABSA NEW GOLD |
BRITISH AMERICAN and ABSA NEW Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BRITISH AMERICAN and ABSA NEW
The main advantage of trading using opposite BRITISH AMERICAN and ABSA NEW positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BRITISH AMERICAN position performs unexpectedly, ABSA NEW 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 NEW will offset losses from the drop in ABSA NEW's long position.| BRITISH AMERICAN vs. ABSA BANK OF | BRITISH AMERICAN vs. CO OPERATIVE BANK OF | BRITISH AMERICAN vs. ABSA NEW GOLD | BRITISH AMERICAN vs. HOME AFRIKA LTD |
| ABSA NEW vs. ABSA BANK OF | ABSA NEW vs. BRITISH AMERICAN TOBACCO | ABSA NEW vs. CO OPERATIVE BANK OF | ABSA NEW vs. HOME AFRIKA LTD |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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