Correlation Between South32 and Brimstone Investment
Can any of the company-specific risk be diversified away by investing in both South32 and Brimstone Investment 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 South32 and Brimstone Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between South32 and Brimstone Investment, you can compare the effects of market volatilities on South32 and Brimstone Investment 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 South32 with a short position of Brimstone Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of South32 and Brimstone Investment.
Diversification Opportunities for South32 and Brimstone Investment
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between South32 and Brimstone is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding South32 and Brimstone Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brimstone Investment and South32 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 South32 are associated (or correlated) with Brimstone Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brimstone Investment has no effect on the direction of South32 i.e., South32 and Brimstone Investment go up and down completely randomly.
Pair Corralation between South32 and Brimstone Investment
Assuming the 90 days trading horizon South32 is expected to under-perform the Brimstone Investment. But the stock apears to be less risky and, when comparing its historical volatility, South32 is 2.01 times less risky than Brimstone Investment. The stock trades about -0.01 of its potential returns per unit of risk. The Brimstone Investment is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 54,500 in Brimstone Investment on October 24, 2024 and sell it today you would lose (4,400) from holding Brimstone Investment or give up 8.07% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.74% |
| Values | Daily Returns |
South32 vs. Brimstone Investment
Performance |
| Timeline |
| South32 |
| Brimstone Investment |
South32 and Brimstone Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with South32 and Brimstone Investment
The main advantage of trading using opposite South32 and Brimstone Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if South32 position performs unexpectedly, Brimstone Investment 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 Brimstone Investment will offset losses from the drop in Brimstone Investment's long position.| South32 vs. Safari Investments RSA | South32 vs. Deneb Investments | South32 vs. CA Sales Holdings | South32 vs. African Media Entertainment |
| Brimstone Investment vs. Nedbank Group | Brimstone Investment vs. Safari Investments RSA | Brimstone Investment vs. Astoria Investments | Brimstone Investment vs. Harmony Gold Mining |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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