Correlation Between Trematon Capital and ABSA Bank
Can any of the company-specific risk be diversified away by investing in both Trematon Capital and ABSA Bank 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 Trematon Capital and ABSA Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Trematon Capital Investments and ABSA Bank Limited, you can compare the effects of market volatilities on Trematon Capital and ABSA Bank 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 Trematon Capital with a short position of ABSA Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Trematon Capital and ABSA Bank.
Diversification Opportunities for Trematon Capital and ABSA Bank
0.13 | Correlation Coefficient |
Average diversification
The 3 months correlation between Trematon and ABSA is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Trematon Capital Investments and ABSA Bank Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ABSA Bank Limited and Trematon Capital 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 Trematon Capital Investments are associated (or correlated) with ABSA Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ABSA Bank Limited has no effect on the direction of Trematon Capital i.e., Trematon Capital and ABSA Bank go up and down completely randomly.
Pair Corralation between Trematon Capital and ABSA Bank
Assuming the 90 days trading horizon Trematon Capital Investments is expected to generate 4.98 times more return on investment than ABSA Bank. However, Trematon Capital is 4.98 times more volatile than ABSA Bank Limited. It trades about 0.16 of its potential returns per unit of risk. ABSA Bank Limited is currently generating about 0.22 per unit of risk. If you would invest 23,600 in Trematon Capital Investments on August 28, 2024 and sell it today you would earn a total of 1,900 from holding Trematon Capital Investments or generate 8.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Trematon Capital Investments vs. ABSA Bank Limited
Performance |
| Timeline |
| Trematon Capital Inv |
| ABSA Bank Limited |
Trematon Capital and ABSA Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Trematon Capital and ABSA Bank
The main advantage of trading using opposite Trematon Capital and ABSA Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Trematon Capital position performs unexpectedly, ABSA Bank 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 Bank will offset losses from the drop in ABSA Bank's long position.| Trematon Capital vs. Lighthouse Capital | Trematon Capital vs. Centaur Bci Balanced | Trematon Capital vs. Sabvest Capital | Trematon Capital vs. Growthpoint Properties |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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