Correlation Between BII Railway and PEPKOR
Can any of the company-specific risk be diversified away by investing in both BII Railway and PEPKOR 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 BII Railway and PEPKOR into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BII Railway Transportation and PEPKOR LTD, you can compare the effects of market volatilities on BII Railway and PEPKOR 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 BII Railway with a short position of PEPKOR. Check out your portfolio center. Please also check ongoing floating volatility patterns of BII Railway and PEPKOR.
Diversification Opportunities for BII Railway and PEPKOR
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between BII and PEPKOR is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding BII Railway Transportation and PEPKOR LTD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PEPKOR LTD and BII Railway 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 BII Railway Transportation are associated (or correlated) with PEPKOR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PEPKOR LTD has no effect on the direction of BII Railway i.e., BII Railway and PEPKOR go up and down completely randomly.
Pair Corralation between BII Railway and PEPKOR
Assuming the 90 days horizon BII Railway is expected to generate 11.23 times less return on investment than PEPKOR. But when comparing it to its historical volatility, BII Railway Transportation is 4.77 times less risky than PEPKOR. It trades about 0.06 of its potential returns per unit of risk. PEPKOR LTD is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 72.00 in PEPKOR LTD on November 1, 2024 and sell it today you would earn a total of 56.00 from holding PEPKOR LTD or generate 77.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 98.33% |
| Values | Daily Returns |
BII Railway Transportation vs. PEPKOR LTD
Performance |
| Timeline |
| BII Railway Transpor |
| PEPKOR LTD |
BII Railway and PEPKOR Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BII Railway and PEPKOR
The main advantage of trading using opposite BII Railway and PEPKOR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BII Railway position performs unexpectedly, PEPKOR 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 PEPKOR will offset losses from the drop in PEPKOR's long position.| BII Railway vs. BORR DRILLING NEW | BII Railway vs. PROSIEBENSAT1 MEDIADR4 | BII Railway vs. ZINC MEDIA GR | BII Railway vs. ATRESMEDIA |
| PEPKOR vs. Transport International Holdings | PEPKOR vs. PREMIER FOODS | PEPKOR vs. BII Railway Transportation | PEPKOR vs. PATTIES FOODS |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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