Correlation Between Pan African and Old Mutual
Can any of the company-specific risk be diversified away by investing in both Pan African and Old Mutual 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 Pan African and Old Mutual into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pan African Resources and Old Mutual, you can compare the effects of market volatilities on Pan African and Old Mutual 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 Pan African with a short position of Old Mutual. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pan African and Old Mutual.
Diversification Opportunities for Pan African and Old Mutual
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Pan and Old is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Pan African Resources and Old Mutual in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Old Mutual and Pan African 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 Pan African Resources are associated (or correlated) with Old Mutual. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Old Mutual has no effect on the direction of Pan African i.e., Pan African and Old Mutual go up and down completely randomly.
Pair Corralation between Pan African and Old Mutual
Assuming the 90 days trading horizon Pan African Resources is expected to generate 1.43 times more return on investment than Old Mutual. However, Pan African is 1.43 times more volatile than Old Mutual. It trades about 0.16 of its potential returns per unit of risk. Old Mutual is currently generating about 0.06 per unit of risk. If you would invest 36,500 in Pan African Resources on September 8, 2024 and sell it today you would earn a total of 49,900 from holding Pan African Resources or generate 136.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pan African Resources vs. Old Mutual
Performance |
| Timeline |
| Pan African Resources |
| Old Mutual |
Pan African and Old Mutual Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pan African and Old Mutual
The main advantage of trading using opposite Pan African and Old Mutual positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pan African position performs unexpectedly, Old Mutual 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 Old Mutual will offset losses from the drop in Old Mutual's long position.| Pan African vs. Gold Fields | Pan African vs. Sibanye Stillwater | Pan African vs. Harmony Gold Mining | Pan African vs. Randgold Exploration |
| Old Mutual vs. Blue Label Telecoms | Old Mutual vs. We Buy Cars | Old Mutual vs. Ascendis Health | Old Mutual vs. City Lodge Hotels |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
Other Complementary Tools
| Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes | |
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| Commodity Directory Find actively traded commodities issued by global exchanges | |
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format | |
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities |