Correlation Between Mid Southern and Absa Group
Can any of the company-specific risk be diversified away by investing in both Mid Southern and Absa Group 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 Mid Southern and Absa Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mid Southern Bancorp and Absa Group Limited, you can compare the effects of market volatilities on Mid Southern and Absa Group 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 Mid Southern with a short position of Absa Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mid Southern and Absa Group.
Diversification Opportunities for Mid Southern and Absa Group
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Mid and Absa is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Mid Southern Bancorp and Absa Group Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Absa Group Limited and Mid Southern 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 Mid Southern Bancorp are associated (or correlated) with Absa Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Absa Group Limited has no effect on the direction of Mid Southern i.e., Mid Southern and Absa Group go up and down completely randomly.
Pair Corralation between Mid Southern and Absa Group
Given the investment horizon of 90 days Mid Southern is expected to generate 13.98 times less return on investment than Absa Group. But when comparing it to its historical volatility, Mid Southern Bancorp is 2.28 times less risky than Absa Group. It trades about 0.01 of its potential returns per unit of risk. Absa Group Limited is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 336.00 in Absa Group Limited on October 30, 2024 and sell it today you would earn a total of 475.00 from holding Absa Group Limited or generate 141.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 23.12% |
| Values | Daily Returns |
Mid Southern Bancorp vs. Absa Group Limited
Performance |
| Timeline |
| Mid Southern Bancorp |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Absa Group Limited |
Mid Southern and Absa Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mid Southern and Absa Group
The main advantage of trading using opposite Mid Southern and Absa Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mid Southern position performs unexpectedly, Absa Group 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 Group will offset losses from the drop in Absa Group's long position.| Mid Southern vs. Community West Bancshares | Mid Southern vs. First Financial Northwest | Mid Southern vs. CF Bankshares | Mid Southern vs. Home Federal Bancorp |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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