Correlation Between Barloworld and Hall Of

Can any of the company-specific risk be diversified away by investing in both Barloworld and Hall Of 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 Barloworld and Hall Of into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Barloworld Ltd ADR and Hall of Fame, you can compare the effects of market volatilities on Barloworld and Hall Of 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 Barloworld with a short position of Hall Of. Check out your portfolio center. Please also check ongoing floating volatility patterns of Barloworld and Hall Of.

Diversification Opportunities for Barloworld and Hall Of

0.01

Correlation Coefficient

Barloworld  Hall Of

Significant diversification

The 3 months correlation between Barloworld and Hall is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Barloworld Ltd ADR and Hall of Fame in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hall of Fame and Barloworld 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 Barloworld Ltd ADR are associated (or correlated) with Hall Of. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hall of Fame has no effect on the direction of Barloworld i.e., Barloworld and Hall Of go up and down completely randomly.

Pair Corralation between Barloworld and Hall Of

Assuming the 90 days horizon Barloworld is expected to generate 22.23 times less return on investment than Hall Of. But when comparing it to its historical volatility, Barloworld Ltd ADR is 6.87 times less risky than Hall Of. It trades about 0.03 of its potential returns per unit of risk. Hall of Fame is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  7.79  in Hall of Fame on September 2, 2024 and sell it today you would lose (7.03) from holding Hall of Fame or give up 90.24% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	74.74%
Values	Daily Returns

Barloworld Ltd ADR  vs.  Hall of Fame

Barloworld ADR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Barloworld Ltd ADR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Barloworld is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Hall of Fame

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Hall of Fame are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, Hall Of showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Barloworld and Hall Of

The main advantage of trading using opposite Barloworld and Hall Of positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Barloworld position performs unexpectedly, Hall Of 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 Hall Of will offset losses from the drop in Hall Of's long position.

The idea behind Barloworld Ltd ADR and Hall of Fame pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.