Correlation Between Frontier Transport and Afrimat
Can any of the company-specific risk be diversified away by investing in both Frontier Transport and Afrimat 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 Frontier Transport and Afrimat into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Frontier Transport Holdings and Afrimat, you can compare the effects of market volatilities on Frontier Transport and Afrimat 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 Frontier Transport with a short position of Afrimat. Check out your portfolio center. Please also check ongoing floating volatility patterns of Frontier Transport and Afrimat.
Diversification Opportunities for Frontier Transport and Afrimat
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Frontier and Afrimat is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Frontier Transport Holdings and Afrimat in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Afrimat and Frontier Transport 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 Frontier Transport Holdings are associated (or correlated) with Afrimat. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Afrimat has no effect on the direction of Frontier Transport i.e., Frontier Transport and Afrimat go up and down completely randomly.
Pair Corralation between Frontier Transport and Afrimat
Assuming the 90 days trading horizon Frontier Transport is expected to generate 1.92 times less return on investment than Afrimat. But when comparing it to its historical volatility, Frontier Transport Holdings is 3.0 times less risky than Afrimat. It trades about 0.06 of its potential returns per unit of risk. Afrimat is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 509,208 in Afrimat on September 3, 2024 and sell it today you would earn a total of 142,092 from holding Afrimat or generate 27.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Frontier Transport Holdings vs. Afrimat
Performance |
| Timeline |
| Frontier Transport |
| Afrimat |
Frontier Transport and Afrimat Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Frontier Transport and Afrimat
The main advantage of trading using opposite Frontier Transport and Afrimat positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Frontier Transport position performs unexpectedly, Afrimat 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 Afrimat will offset losses from the drop in Afrimat's long position.| Frontier Transport vs. Sasol Ltd Bee | Frontier Transport vs. Centaur Bci Balanced | Frontier Transport vs. Growthpoint Properties | Frontier Transport vs. Coronation Global Equity |
| Afrimat vs. Deneb Investments | Afrimat vs. Frontier Transport Holdings | Afrimat vs. RCL Foods | Afrimat vs. Astral 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
Other Complementary Tools
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. | |
| Equity Valuation Check real value of public entities based on technical and fundamental data | |
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets | |
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments |