Correlation Between Blue Label and Rex Trueform
Can any of the company-specific risk be diversified away by investing in both Blue Label and Rex Trueform 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 Blue Label and Rex Trueform into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Blue Label Telecoms and Rex Trueform Group, you can compare the effects of market volatilities on Blue Label and Rex Trueform 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 Blue Label with a short position of Rex Trueform. Check out your portfolio center. Please also check ongoing floating volatility patterns of Blue Label and Rex Trueform.
Diversification Opportunities for Blue Label and Rex Trueform
-0.74 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Blue and Rex is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding Blue Label Telecoms and Rex Trueform Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rex Trueform Group and Blue Label 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 Blue Label Telecoms are associated (or correlated) with Rex Trueform. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rex Trueform Group has no effect on the direction of Blue Label i.e., Blue Label and Rex Trueform go up and down completely randomly.
Pair Corralation between Blue Label and Rex Trueform
Assuming the 90 days trading horizon Blue Label Telecoms is expected to generate 1.27 times more return on investment than Rex Trueform. However, Blue Label is 1.27 times more volatile than Rex Trueform Group. It trades about 0.08 of its potential returns per unit of risk. Rex Trueform Group is currently generating about -0.03 per unit of risk. If you would invest 33,800 in Blue Label Telecoms on September 12, 2024 and sell it today you would earn a total of 25,000 from holding Blue Label Telecoms or generate 73.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Blue Label Telecoms vs. Rex Trueform Group
Performance |
| Timeline |
| Blue Label Telecoms |
| Rex Trueform Group |
Blue Label and Rex Trueform Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Blue Label and Rex Trueform
The main advantage of trading using opposite Blue Label and Rex Trueform positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Blue Label position performs unexpectedly, Rex Trueform 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 Rex Trueform will offset losses from the drop in Rex Trueform's long position.| Blue Label vs. Safari Investments RSA | Blue Label vs. Capitec Bank Holdings | Blue Label vs. Copper 360 | Blue Label vs. City Lodge Hotels |
| Rex Trueform vs. E Media Holdings | Rex Trueform vs. AfroCentric Investment Corp | Rex Trueform vs. Hosken Consolidated Investments | Rex Trueform vs. Blue Label Telecoms |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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