Correlation Between Growthpoint Properties and CA Sales
Can any of the company-specific risk be diversified away by investing in both Growthpoint Properties and CA Sales 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 CA Sales into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Growthpoint Properties and CA Sales Holdings, you can compare the effects of market volatilities on Growthpoint Properties and CA Sales 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 CA Sales. Check out your portfolio center. Please also check ongoing floating volatility patterns of Growthpoint Properties and CA Sales.
Diversification Opportunities for Growthpoint Properties and CA Sales
-0.63 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Growthpoint and CAA is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Growthpoint Properties and CA Sales Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CA Sales Holdings 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 CA Sales. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CA Sales Holdings has no effect on the direction of Growthpoint Properties i.e., Growthpoint Properties and CA Sales go up and down completely randomly.
Pair Corralation between Growthpoint Properties and CA Sales
Assuming the 90 days trading horizon Growthpoint Properties is expected to generate 1.7 times less return on investment than CA Sales. But when comparing it to its historical volatility, Growthpoint Properties is 1.71 times less risky than CA Sales. It trades about 0.1 of its potential returns per unit of risk. CA Sales Holdings is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 95,306 in CA Sales Holdings on August 26, 2024 and sell it today you would earn a total of 61,694 from holding CA Sales Holdings or generate 64.73% 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. CA Sales Holdings
Performance |
| Timeline |
| Growthpoint Properties |
| CA Sales Holdings |
Growthpoint Properties and CA Sales Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Growthpoint Properties and CA Sales
The main advantage of trading using opposite Growthpoint Properties and CA Sales positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Growthpoint Properties position performs unexpectedly, CA Sales 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 CA Sales will offset losses from the drop in CA Sales' long position.The idea behind Growthpoint Properties and CA Sales Holdings pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| CA Sales vs. Sasol Ltd Bee | CA Sales vs. Growthpoint Properties | CA Sales vs. AfricaRhodium ETF | CA Sales vs. CoreShares Preference Share |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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