Correlation Between CA Sales and African Rainbow
Can any of the company-specific risk be diversified away by investing in both CA Sales and African Rainbow 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 CA Sales and African Rainbow into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CA Sales Holdings and African Rainbow Minerals, you can compare the effects of market volatilities on CA Sales and African Rainbow 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 CA Sales with a short position of African Rainbow. Check out your portfolio center. Please also check ongoing floating volatility patterns of CA Sales and African Rainbow.
Diversification Opportunities for CA Sales and African Rainbow
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between CAA and African is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding CA Sales Holdings and African Rainbow Minerals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on African Rainbow Minerals and CA Sales 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 CA Sales Holdings are associated (or correlated) with African Rainbow. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of African Rainbow Minerals has no effect on the direction of CA Sales i.e., CA Sales and African Rainbow go up and down completely randomly.
Pair Corralation between CA Sales and African Rainbow
Assuming the 90 days trading horizon CA Sales Holdings is expected to generate 1.27 times more return on investment than African Rainbow. However, CA Sales is 1.27 times more volatile than African Rainbow Minerals. It trades about 0.02 of its potential returns per unit of risk. African Rainbow Minerals is currently generating about -0.33 per unit of risk. If you would invest 157,500 in CA Sales Holdings on August 31, 2024 and sell it today you would earn a total of 600.00 from holding CA Sales Holdings or generate 0.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
CA Sales Holdings vs. African Rainbow Minerals
Performance |
| Timeline |
| CA Sales Holdings |
| African Rainbow Minerals |
CA Sales and African Rainbow Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CA Sales and African Rainbow
The main advantage of trading using opposite CA Sales and African Rainbow positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CA Sales position performs unexpectedly, African Rainbow 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 African Rainbow will offset losses from the drop in African Rainbow's long position.| CA Sales vs. Kap Industrial Holdings | CA Sales vs. City Lodge Hotels | CA Sales vs. RCL Foods | CA Sales vs. E Media Holdings |
| African Rainbow vs. Glencore PLC | African Rainbow vs. South32 | African Rainbow vs. Wesizwe | African Rainbow vs. Kore Potash Plc |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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