Correlation Between Dis Chem and JSE
Can any of the company-specific risk be diversified away by investing in both Dis Chem and JSE 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 JSE 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 JSE Limited, you can compare the effects of market volatilities on Dis Chem and JSE 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 JSE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dis Chem and JSE.
Diversification Opportunities for Dis Chem and JSE
Weak diversification
The 3 months correlation between Dis and JSE is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Dis Chem Pharmacies and JSE Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JSE Limited 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 JSE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JSE Limited has no effect on the direction of Dis Chem i.e., Dis Chem and JSE go up and down completely randomly.
Pair Corralation between Dis Chem and JSE
Assuming the 90 days trading horizon Dis Chem Pharmacies is expected to generate 1.1 times more return on investment than JSE. However, Dis Chem is 1.1 times more volatile than JSE Limited. It trades about 0.04 of its potential returns per unit of risk. JSE Limited is currently generating about 0.04 per unit of risk. If you would invest 297,747 in Dis Chem Pharmacies on August 30, 2024 and sell it today you would earn a total of 89,753 from holding Dis Chem Pharmacies or generate 30.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dis Chem Pharmacies vs. JSE Limited
Performance |
| Timeline |
| Dis Chem Pharmacies |
| JSE Limited |
Dis Chem and JSE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dis Chem and JSE
The main advantage of trading using opposite Dis Chem and JSE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dis Chem position performs unexpectedly, JSE 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 JSE will offset losses from the drop in JSE's long position.| Dis Chem vs. Standard Bank Group | Dis Chem vs. City Lodge Hotels | Dis Chem vs. Life Healthcare | Dis Chem vs. Hosken Consolidated Investments |
| JSE vs. British American Tobacco | JSE vs. Anglo American PLC | JSE vs. Anglo American Platinum | JSE vs. ABSA Bank Limited |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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