Correlation Between Blue Label and Safari Investments
Can any of the company-specific risk be diversified away by investing in both Blue Label and Safari Investments 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 Safari Investments 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 Safari Investments RSA, you can compare the effects of market volatilities on Blue Label and Safari Investments 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 Safari Investments. Check out your portfolio center. Please also check ongoing floating volatility patterns of Blue Label and Safari Investments.
Diversification Opportunities for Blue Label and Safari Investments
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Blue and Safari is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Blue Label Telecoms and Safari Investments RSA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Safari Investments RSA 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 Safari Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Safari Investments RSA has no effect on the direction of Blue Label i.e., Blue Label and Safari Investments go up and down completely randomly.
Pair Corralation between Blue Label and Safari Investments
Assuming the 90 days trading horizon Blue Label is expected to generate 1.69 times less return on investment than Safari Investments. But when comparing it to its historical volatility, Blue Label Telecoms is 1.2 times less risky than Safari Investments. It trades about 0.02 of its potential returns per unit of risk. Safari Investments RSA is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 54,526 in Safari Investments RSA on October 21, 2024 and sell it today you would earn a total of 12,874 from holding Safari Investments RSA or generate 23.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 98.98% |
| Values | Daily Returns |
Blue Label Telecoms vs. Safari Investments RSA
Performance |
| Timeline |
| Blue Label Telecoms |
| Safari Investments RSA |
Blue Label and Safari Investments Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Blue Label and Safari Investments
The main advantage of trading using opposite Blue Label and Safari Investments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Blue Label position performs unexpectedly, Safari Investments 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 Safari Investments will offset losses from the drop in Safari Investments' long position.| Blue Label vs. Hosken Consolidated Investments | Blue Label vs. Astral Foods | Blue Label vs. Deneb Investments | Blue Label vs. Zeder Investments |
| Safari Investments vs. Astral Foods | Safari Investments vs. E Media Holdings | Safari Investments vs. ABSA Bank Limited | Safari Investments vs. Boxer Retail |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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