Correlation Between Tsogo Sun and RMB Holdings
Can any of the company-specific risk be diversified away by investing in both Tsogo Sun and RMB Holdings 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 Tsogo Sun and RMB Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tsogo Sun and RMB Holdings, you can compare the effects of market volatilities on Tsogo Sun and RMB Holdings 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 Tsogo Sun with a short position of RMB Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tsogo Sun and RMB Holdings.
Diversification Opportunities for Tsogo Sun and RMB Holdings
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Tsogo and RMB is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Tsogo Sun and RMB Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RMB Holdings and Tsogo Sun 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 Tsogo Sun are associated (or correlated) with RMB Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RMB Holdings has no effect on the direction of Tsogo Sun i.e., Tsogo Sun and RMB Holdings go up and down completely randomly.
Pair Corralation between Tsogo Sun and RMB Holdings
Assuming the 90 days trading horizon Tsogo Sun is expected to under-perform the RMB Holdings. In addition to that, Tsogo Sun is 1.08 times more volatile than RMB Holdings. It trades about -0.34 of its total potential returns per unit of risk. RMB Holdings is currently generating about 0.07 per unit of volatility. If you would invest 4,100 in RMB Holdings on September 3, 2024 and sell it today you would earn a total of 100.00 from holding RMB Holdings or generate 2.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tsogo Sun vs. RMB Holdings
Performance |
| Timeline |
| Tsogo Sun |
| RMB Holdings |
Tsogo Sun and RMB Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tsogo Sun and RMB Holdings
The main advantage of trading using opposite Tsogo Sun and RMB Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tsogo Sun position performs unexpectedly, RMB Holdings 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 RMB Holdings will offset losses from the drop in RMB Holdings' long position.| Tsogo Sun vs. British American Tobacco | Tsogo Sun vs. Astral Foods | Tsogo Sun vs. E Media Holdings | Tsogo Sun vs. Reinet Investments SCA |
| RMB Holdings vs. ABSA Bank Limited | RMB Holdings vs. Investec | RMB Holdings vs. Sasol Ltd Bee | RMB Holdings 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
Other Complementary Tools
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. | |
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
| Instant Ratings Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities |