Correlation Between BLK and SAFEX
Can any of the company-specific risk be diversified away by investing in both BLK and SAFEX 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 BLK and SAFEX into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BLK and SAFEX, you can compare the effects of market volatilities on BLK and SAFEX 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 BLK with a short position of SAFEX. Check out your portfolio center. Please also check ongoing floating volatility patterns of BLK and SAFEX.
Diversification Opportunities for BLK and SAFEX
Pay attention - limited upside
The 3 months correlation between BLK and SAFEX is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding BLK and SAFEX in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SAFEX and BLK 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 BLK are associated (or correlated) with SAFEX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SAFEX has no effect on the direction of BLK i.e., BLK and SAFEX go up and down completely randomly.
Pair Corralation between BLK and SAFEX
If you would invest 1.66 in BLK on November 19, 2024 and sell it today you would earn a total of 1.27 from holding BLK or generate 76.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 0.0% |
| Values | Daily Returns |
BLK vs. SAFEX
Performance |
| Timeline |
| BLK |
| SAFEX |
Risk-Adjusted Performance
Very Weak
Weak | Strong |
BLK and SAFEX Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BLK and SAFEX
The main advantage of trading using opposite BLK and SAFEX positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BLK position performs unexpectedly, SAFEX 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 SAFEX will offset losses from the drop in SAFEX's long position.The idea behind BLK and SAFEX 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.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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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