Correlation Between Frontier Transport and Aspen Pharmacare
Can any of the company-specific risk be diversified away by investing in both Frontier Transport and Aspen Pharmacare 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 Aspen Pharmacare 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 Aspen Pharmacare Holdings, you can compare the effects of market volatilities on Frontier Transport and Aspen Pharmacare 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 Aspen Pharmacare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Frontier Transport and Aspen Pharmacare.
Diversification Opportunities for Frontier Transport and Aspen Pharmacare
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Frontier and Aspen is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Frontier Transport Holdings and Aspen Pharmacare Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aspen Pharmacare Holdings 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 Aspen Pharmacare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aspen Pharmacare Holdings has no effect on the direction of Frontier Transport i.e., Frontier Transport and Aspen Pharmacare go up and down completely randomly.
Pair Corralation between Frontier Transport and Aspen Pharmacare
Assuming the 90 days trading horizon Frontier Transport Holdings is expected to generate 2.25 times more return on investment than Aspen Pharmacare. However, Frontier Transport is 2.25 times more volatile than Aspen Pharmacare Holdings. It trades about 0.06 of its potential returns per unit of risk. Aspen Pharmacare Holdings is currently generating about 0.03 per unit of risk. If you would invest 36,153 in Frontier Transport Holdings on September 3, 2024 and sell it today you would earn a total of 36,847 from holding Frontier Transport Holdings or generate 101.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Frontier Transport Holdings vs. Aspen Pharmacare Holdings
Performance |
| Timeline |
| Frontier Transport |
| Aspen Pharmacare Holdings |
Frontier Transport and Aspen Pharmacare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Frontier Transport and Aspen Pharmacare
The main advantage of trading using opposite Frontier Transport and Aspen Pharmacare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Frontier Transport position performs unexpectedly, Aspen Pharmacare 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 Aspen Pharmacare will offset losses from the drop in Aspen Pharmacare'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 |
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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 Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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