Correlation Between Kap Industrial and Vodacom
Can any of the company-specific risk be diversified away by investing in both Kap Industrial and Vodacom 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 Vodacom 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 Vodacom Group, you can compare the effects of market volatilities on Kap Industrial and Vodacom 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 Vodacom. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kap Industrial and Vodacom.
Diversification Opportunities for Kap Industrial and Vodacom
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Kap and Vodacom is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Kap Industrial Holdings and Vodacom Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vodacom Group 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 Vodacom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vodacom Group has no effect on the direction of Kap Industrial i.e., Kap Industrial and Vodacom go up and down completely randomly.
Pair Corralation between Kap Industrial and Vodacom
Assuming the 90 days trading horizon Kap Industrial Holdings is expected to under-perform the Vodacom. In addition to that, Kap Industrial is 1.92 times more volatile than Vodacom Group. It trades about -0.03 of its total potential returns per unit of risk. Vodacom Group is currently generating about 0.16 per unit of volatility. If you would invest 1,010,800 in Vodacom Group on October 24, 2024 and sell it today you would earn a total of 38,200 from holding Vodacom Group or generate 3.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.0% |
| Values | Daily Returns |
Kap Industrial Holdings vs. Vodacom Group
Performance |
| Timeline |
| Kap Industrial Holdings |
| Vodacom Group |
Kap Industrial and Vodacom Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kap Industrial and Vodacom
The main advantage of trading using opposite Kap Industrial and Vodacom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kap Industrial position performs unexpectedly, Vodacom 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 Vodacom will offset losses from the drop in Vodacom's long position.| Kap Industrial vs. Frontier Transport Holdings | Kap Industrial vs. Astoria Investments | Kap Industrial vs. Allied Electronics | Kap Industrial vs. Astral Foods |
| Vodacom vs. ABSA Bank Limited | Vodacom vs. Kap Industrial Holdings | Vodacom vs. Nedbank Group | Vodacom vs. Blue Label Telecoms |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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