Correlation Between Trematon Capital and African Rainbow
Can any of the company-specific risk be diversified away by investing in both Trematon Capital and African Rainbow 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 African Rainbow 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 African Rainbow Minerals, you can compare the effects of market volatilities on Trematon Capital and African Rainbow 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 African Rainbow. Check out your portfolio center. Please also check ongoing floating volatility patterns of Trematon Capital and African Rainbow.
Diversification Opportunities for Trematon Capital and African Rainbow
0.12 | Correlation Coefficient |
Average diversification
The 3 months correlation between Trematon and African is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Trematon Capital Investments and African Rainbow Minerals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on African Rainbow Minerals 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 African Rainbow. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of African Rainbow Minerals has no effect on the direction of Trematon Capital i.e., Trematon Capital and African Rainbow go up and down completely randomly.
Pair Corralation between Trematon Capital and African Rainbow
Assuming the 90 days trading horizon Trematon Capital Investments is expected to under-perform the African Rainbow. In addition to that, Trematon Capital is 1.7 times more volatile than African Rainbow Minerals. It trades about -0.08 of its total potential returns per unit of risk. African Rainbow Minerals is currently generating about -0.04 per unit of volatility. If you would invest 1,733,100 in African Rainbow Minerals on September 13, 2024 and sell it today you would lose (128,200) from holding African Rainbow Minerals or give up 7.4% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Trematon Capital Investments vs. African Rainbow Minerals
Performance |
| Timeline |
| Trematon Capital Inv |
| African Rainbow Minerals |
Trematon Capital and African Rainbow Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Trematon Capital and African Rainbow
The main advantage of trading using opposite Trematon Capital and African Rainbow positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Trematon Capital position performs unexpectedly, African Rainbow 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 African Rainbow will offset losses from the drop in African Rainbow's long position.| Trematon Capital vs. Reinet Investments SCA | Trematon Capital vs. Deneb Investments | Trematon Capital vs. RCL Foods | Trematon Capital vs. HomeChoice Investments |
| African Rainbow vs. Jubilee Platinum | African Rainbow vs. Europa Metals | African Rainbow vs. Sasol Ltd Bee | African Rainbow vs. Centaur Bci Balanced |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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