Correlation Between ECONET WIRELESS and STAR AFRICA
Can any of the company-specific risk be diversified away by investing in both ECONET WIRELESS and STAR AFRICA 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 ECONET WIRELESS and STAR AFRICA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ECONET WIRELESS HOLDINGS and STAR AFRICA PORATION, you can compare the effects of market volatilities on ECONET WIRELESS and STAR AFRICA 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 ECONET WIRELESS with a short position of STAR AFRICA. Check out your portfolio center. Please also check ongoing floating volatility patterns of ECONET WIRELESS and STAR AFRICA.
Diversification Opportunities for ECONET WIRELESS and STAR AFRICA
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between ECONET and STAR is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding ECONET WIRELESS HOLDINGS and STAR AFRICA PORATION in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on STAR AFRICA PORATION and ECONET WIRELESS 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 ECONET WIRELESS HOLDINGS are associated (or correlated) with STAR AFRICA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of STAR AFRICA PORATION has no effect on the direction of ECONET WIRELESS i.e., ECONET WIRELESS and STAR AFRICA go up and down completely randomly.
Pair Corralation between ECONET WIRELESS and STAR AFRICA
Assuming the 90 days trading horizon ECONET WIRELESS HOLDINGS is expected to under-perform the STAR AFRICA. But the stock apears to be less risky and, when comparing its historical volatility, ECONET WIRELESS HOLDINGS is 2.13 times less risky than STAR AFRICA. The stock trades about -0.23 of its potential returns per unit of risk. The STAR AFRICA PORATION is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 220.00 in STAR AFRICA PORATION on November 6, 2024 and sell it today you would earn a total of 30.00 from holding STAR AFRICA PORATION or generate 13.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ECONET WIRELESS HOLDINGS vs. STAR AFRICA PORATION
Performance |
| Timeline |
| ECONET WIRELESS HOLDINGS |
| STAR AFRICA PORATION |
ECONET WIRELESS and STAR AFRICA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ECONET WIRELESS and STAR AFRICA
The main advantage of trading using opposite ECONET WIRELESS and STAR AFRICA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ECONET WIRELESS position performs unexpectedly, STAR AFRICA 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 STAR AFRICA will offset losses from the drop in STAR AFRICA's long position.| ECONET WIRELESS vs. STAR AFRICA PORATION | ECONET WIRELESS vs. CAFCA LIMITED | ECONET WIRELESS vs. FIRST MUTUAL PROPERTIES | ECONET WIRELESS vs. AFRICAN DISTILLERS LIMITED |
| STAR AFRICA vs. CAFCA LIMITED | STAR AFRICA vs. FIRST MUTUAL PROPERTIES | STAR AFRICA vs. AFRICAN DISTILLERS LIMITED | STAR AFRICA vs. TANGANDA TEA PANY |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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