Correlation Between Frontier Transport and Nampak
Can any of the company-specific risk be diversified away by investing in both Frontier Transport and Nampak 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 Nampak 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 Nampak, you can compare the effects of market volatilities on Frontier Transport and Nampak 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 Nampak. Check out your portfolio center. Please also check ongoing floating volatility patterns of Frontier Transport and Nampak.
Diversification Opportunities for Frontier Transport and Nampak
-0.05 | Correlation Coefficient |
Good diversification
The 3 months correlation between Frontier and Nampak is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Frontier Transport Holdings and Nampak in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nampak 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 Nampak. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nampak has no effect on the direction of Frontier Transport i.e., Frontier Transport and Nampak go up and down completely randomly.
Pair Corralation between Frontier Transport and Nampak
Assuming the 90 days trading horizon Frontier Transport is expected to generate 4.11 times less return on investment than Nampak. In addition to that, Frontier Transport is 1.84 times more volatile than Nampak. It trades about 0.01 of its total potential returns per unit of risk. Nampak is currently generating about 0.06 per unit of volatility. If you would invest 4,050,000 in Nampak on September 2, 2024 and sell it today you would earn a total of 313,200 from holding Nampak or generate 7.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Frontier Transport Holdings vs. Nampak
Performance |
| Timeline |
| Frontier Transport |
| Nampak |
Frontier Transport and Nampak Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Frontier Transport and Nampak
The main advantage of trading using opposite Frontier Transport and Nampak positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Frontier Transport position performs unexpectedly, Nampak 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 Nampak will offset losses from the drop in Nampak's long position.| Frontier Transport vs. Reinet Investments SCA | Frontier Transport vs. Trematon Capital Investments | Frontier Transport vs. Deneb Investments | Frontier Transport vs. Allied Electronics |
| Nampak vs. Safari Investments RSA | Nampak vs. Blue Label Telecoms | Nampak vs. Trematon Capital Investments | Nampak vs. HomeChoice Investments |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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