Correlation Between ABSA Bank and Sabvest Capital
Can any of the company-specific risk be diversified away by investing in both ABSA Bank and Sabvest Capital 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 ABSA Bank and Sabvest Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ABSA Bank Limited and Sabvest Capital, you can compare the effects of market volatilities on ABSA Bank and Sabvest Capital 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 ABSA Bank with a short position of Sabvest Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of ABSA Bank and Sabvest Capital.
Diversification Opportunities for ABSA Bank and Sabvest Capital
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between ABSA and Sabvest is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding ABSA Bank Limited and Sabvest Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sabvest Capital and ABSA Bank 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 ABSA Bank Limited are associated (or correlated) with Sabvest Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sabvest Capital has no effect on the direction of ABSA Bank i.e., ABSA Bank and Sabvest Capital go up and down completely randomly.
Pair Corralation between ABSA Bank and Sabvest Capital
Assuming the 90 days trading horizon ABSA Bank is expected to generate 3.52 times less return on investment than Sabvest Capital. But when comparing it to its historical volatility, ABSA Bank Limited is 2.16 times less risky than Sabvest Capital. It trades about 0.08 of its potential returns per unit of risk. Sabvest Capital is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 766,407 in Sabvest Capital on September 4, 2024 and sell it today you would earn a total of 143,593 from holding Sabvest Capital or generate 18.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ABSA Bank Limited vs. Sabvest Capital
Performance |
| Timeline |
| ABSA Bank Limited |
| Sabvest Capital |
ABSA Bank and Sabvest Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ABSA Bank and Sabvest Capital
The main advantage of trading using opposite ABSA Bank and Sabvest Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ABSA Bank position performs unexpectedly, Sabvest Capital 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 Sabvest Capital will offset losses from the drop in Sabvest Capital's long position.| ABSA Bank vs. CA Sales Holdings | ABSA Bank vs. Astoria Investments | ABSA Bank vs. Blue Label Telecoms | ABSA Bank vs. Frontier Transport Holdings |
| Sabvest Capital vs. ABSA Bank Limited | Sabvest Capital vs. HomeChoice Investments | Sabvest Capital vs. AfroCentric Investment Corp | Sabvest Capital 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 CEOs Directory module to screen CEOs from public companies around the world.
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