Correlation Between Dis Chem and Impala Platinum
Can any of the company-specific risk be diversified away by investing in both Dis Chem and Impala Platinum 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 Dis Chem and Impala Platinum into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dis Chem Pharmacies and Impala Platinum Holdings, you can compare the effects of market volatilities on Dis Chem and Impala Platinum 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 Dis Chem with a short position of Impala Platinum. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dis Chem and Impala Platinum.
Diversification Opportunities for Dis Chem and Impala Platinum
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Dis and Impala is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Dis Chem Pharmacies and Impala Platinum Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Impala Platinum Holdings and Dis Chem 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 Dis Chem Pharmacies are associated (or correlated) with Impala Platinum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Impala Platinum Holdings has no effect on the direction of Dis Chem i.e., Dis Chem and Impala Platinum go up and down completely randomly.
Pair Corralation between Dis Chem and Impala Platinum
Assuming the 90 days trading horizon Dis Chem Pharmacies is expected to under-perform the Impala Platinum. But the stock apears to be less risky and, when comparing its historical volatility, Dis Chem Pharmacies is 3.02 times less risky than Impala Platinum. The stock trades about -0.04 of its potential returns per unit of risk. The Impala Platinum Holdings is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 996,500 in Impala Platinum Holdings on August 28, 2024 and sell it today you would earn a total of 16,200 from holding Impala Platinum Holdings or generate 1.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dis Chem Pharmacies vs. Impala Platinum Holdings
Performance |
| Timeline |
| Dis Chem Pharmacies |
| Impala Platinum Holdings |
Dis Chem and Impala Platinum Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dis Chem and Impala Platinum
The main advantage of trading using opposite Dis Chem and Impala Platinum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dis Chem position performs unexpectedly, Impala Platinum 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 Impala Platinum will offset losses from the drop in Impala Platinum's long position.| Dis Chem vs. Centaur Bci Balanced | Dis Chem vs. Sabvest Capital | Dis Chem vs. Growthpoint Properties | Dis Chem vs. Bowler Metcalf |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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