Correlation Between Kap Industrial and Sebata Holdings
Can any of the company-specific risk be diversified away by investing in both Kap Industrial and Sebata Holdings 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 Kap Industrial and Sebata Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kap Industrial Holdings and Sebata Holdings, you can compare the effects of market volatilities on Kap Industrial and Sebata Holdings 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 Kap Industrial with a short position of Sebata Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kap Industrial and Sebata Holdings.
Diversification Opportunities for Kap Industrial and Sebata Holdings
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Kap and Sebata is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Kap Industrial Holdings and Sebata Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sebata Holdings and Kap Industrial 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 Kap Industrial Holdings are associated (or correlated) with Sebata Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sebata Holdings has no effect on the direction of Kap Industrial i.e., Kap Industrial and Sebata Holdings go up and down completely randomly.
Pair Corralation between Kap Industrial and Sebata Holdings
Assuming the 90 days trading horizon Kap Industrial Holdings is expected to generate 0.48 times more return on investment than Sebata Holdings. However, Kap Industrial Holdings is 2.08 times less risky than Sebata Holdings. It trades about -0.04 of its potential returns per unit of risk. Sebata Holdings is currently generating about -0.04 per unit of risk. If you would invest 33,300 in Kap Industrial Holdings on September 12, 2024 and sell it today you would lose (1,700) from holding Kap Industrial Holdings or give up 5.11% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kap Industrial Holdings vs. Sebata Holdings
Performance |
| Timeline |
| Kap Industrial Holdings |
| Sebata Holdings |
Kap Industrial and Sebata Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kap Industrial and Sebata Holdings
The main advantage of trading using opposite Kap Industrial and Sebata Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kap Industrial position performs unexpectedly, Sebata Holdings 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 Sebata Holdings will offset losses from the drop in Sebata Holdings' long position.| Kap Industrial vs. Trematon Capital Investments | Kap Industrial vs. E Media Holdings | Kap Industrial vs. Advtech | Kap Industrial vs. Master Drilling Group |
| Sebata Holdings vs. Sasol Ltd Bee | Sebata Holdings vs. Centaur Bci Balanced | Sebata Holdings vs. Sabvest Capital | Sebata Holdings vs. Growthpoint Properties |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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