Correlation Between Growthpoint Properties and ABSA Bank
Can any of the company-specific risk be diversified away by investing in both Growthpoint Properties and ABSA Bank 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 Growthpoint Properties and ABSA Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Growthpoint Properties and ABSA Bank Limited, you can compare the effects of market volatilities on Growthpoint Properties and ABSA Bank 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 Growthpoint Properties with a short position of ABSA Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Growthpoint Properties and ABSA Bank.
Diversification Opportunities for Growthpoint Properties and ABSA Bank
-0.72 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Growthpoint and ABSA is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Growthpoint Properties and ABSA Bank Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ABSA Bank Limited and Growthpoint Properties 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 Growthpoint Properties are associated (or correlated) with ABSA Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ABSA Bank Limited has no effect on the direction of Growthpoint Properties i.e., Growthpoint Properties and ABSA Bank go up and down completely randomly.
Pair Corralation between Growthpoint Properties and ABSA Bank
Assuming the 90 days trading horizon Growthpoint Properties is expected to generate 1.38 times more return on investment than ABSA Bank. However, Growthpoint Properties is 1.38 times more volatile than ABSA Bank Limited. It trades about 0.06 of its potential returns per unit of risk. ABSA Bank Limited is currently generating about 0.03 per unit of risk. If you would invest 99,905 in Growthpoint Properties on August 28, 2024 and sell it today you would earn a total of 31,095 from holding Growthpoint Properties or generate 31.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Growthpoint Properties vs. ABSA Bank Limited
Performance |
| Timeline |
| Growthpoint Properties |
| ABSA Bank Limited |
Growthpoint Properties and ABSA Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Growthpoint Properties and ABSA Bank
The main advantage of trading using opposite Growthpoint Properties and ABSA Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Growthpoint Properties position performs unexpectedly, ABSA Bank 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 ABSA Bank will offset losses from the drop in ABSA Bank's long position.| Growthpoint Properties vs. CA Sales Holdings | Growthpoint Properties vs. Harmony Gold Mining | Growthpoint Properties vs. British American Tobacco | Growthpoint Properties vs. HomeChoice Investments |
| ABSA Bank vs. Harmony Gold Mining | ABSA Bank vs. Datatec | ABSA Bank vs. Hosken Consolidated Investments | ABSA Bank vs. Master Drilling Group |
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 Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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