Correlation Between Nampak and Life Healthcare
Can any of the company-specific risk be diversified away by investing in both Nampak and Life Healthcare 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 Nampak and Life Healthcare into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nampak and Life Healthcare, you can compare the effects of market volatilities on Nampak and Life Healthcare 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 Nampak with a short position of Life Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nampak and Life Healthcare.
Diversification Opportunities for Nampak and Life Healthcare
-0.09 | Correlation Coefficient |
Good diversification
The 3 months correlation between Nampak and Life is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Nampak and Life Healthcare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Life Healthcare and Nampak 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 Nampak are associated (or correlated) with Life Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Life Healthcare has no effect on the direction of Nampak i.e., Nampak and Life Healthcare go up and down completely randomly.
Pair Corralation between Nampak and Life Healthcare
Assuming the 90 days trading horizon Nampak is expected to generate 7.9 times less return on investment than Life Healthcare. In addition to that, Nampak is 1.32 times more volatile than Life Healthcare. It trades about 0.02 of its total potential returns per unit of risk. Life Healthcare is currently generating about 0.16 per unit of volatility. If you would invest 143,500 in Life Healthcare on September 12, 2024 and sell it today you would earn a total of 31,000 from holding Life Healthcare or generate 21.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 98.44% |
| Values | Daily Returns |
Nampak vs. Life Healthcare
Performance |
| Timeline |
| Nampak |
| Life Healthcare |
Nampak and Life Healthcare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nampak and Life Healthcare
The main advantage of trading using opposite Nampak and Life Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nampak position performs unexpectedly, Life Healthcare 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 Life Healthcare will offset losses from the drop in Life Healthcare's long position.| Nampak vs. Astoria Investments | Nampak vs. Kap Industrial Holdings | Nampak vs. eMedia Holdings Limited | Nampak vs. E Media Holdings |
| Life Healthcare vs. MC Mining | Life Healthcare vs. Deneb Investments | Life Healthcare vs. ABSA Bank Limited | Life Healthcare vs. Zeder Investments |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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