Correlation Between Tiger Brands and Deneb Investments
Can any of the company-specific risk be diversified away by investing in both Tiger Brands and Deneb Investments 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 Tiger Brands and Deneb Investments into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tiger Brands and Deneb Investments, you can compare the effects of market volatilities on Tiger Brands and Deneb Investments 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 Tiger Brands with a short position of Deneb Investments. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tiger Brands and Deneb Investments.
Diversification Opportunities for Tiger Brands and Deneb Investments
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between Tiger and Deneb is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Tiger Brands and Deneb Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Deneb Investments and Tiger Brands 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 Tiger Brands are associated (or correlated) with Deneb Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Deneb Investments has no effect on the direction of Tiger Brands i.e., Tiger Brands and Deneb Investments go up and down completely randomly.
Pair Corralation between Tiger Brands and Deneb Investments
Assuming the 90 days trading horizon Tiger Brands is expected to generate 0.67 times more return on investment than Deneb Investments. However, Tiger Brands is 1.49 times less risky than Deneb Investments. It trades about 0.08 of its potential returns per unit of risk. Deneb Investments is currently generating about 0.02 per unit of risk. If you would invest 1,935,600 in Tiger Brands on September 4, 2024 and sell it today you would earn a total of 587,800 from holding Tiger Brands or generate 30.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tiger Brands vs. Deneb Investments
Performance |
| Timeline |
| Tiger Brands |
| Deneb Investments |
Tiger Brands and Deneb Investments Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tiger Brands and Deneb Investments
The main advantage of trading using opposite Tiger Brands and Deneb Investments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tiger Brands position performs unexpectedly, Deneb Investments 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 Deneb Investments will offset losses from the drop in Deneb Investments' long position.| Tiger Brands vs. Deneb Investments | Tiger Brands vs. HomeChoice Investments | Tiger Brands vs. Safari Investments RSA | Tiger Brands vs. Hosken Consolidated Investments |
| Deneb Investments vs. Reinet Investments SCA | Deneb Investments vs. Safari Investments RSA | Deneb Investments vs. Harmony Gold Mining | Deneb Investments vs. Hosken Consolidated 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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