Correlation Between African Media and Standard Bank
Can any of the company-specific risk be diversified away by investing in both African Media and Standard 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 African Media and Standard Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between African Media Entertainment and Standard Bank Group, you can compare the effects of market volatilities on African Media and Standard 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 African Media with a short position of Standard Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of African Media and Standard Bank.
Diversification Opportunities for African Media and Standard Bank
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between African and Standard is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding African Media Entertainment and Standard Bank Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Standard Bank Group and African Media 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 African Media Entertainment are associated (or correlated) with Standard Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Standard Bank Group has no effect on the direction of African Media i.e., African Media and Standard Bank go up and down completely randomly.
Pair Corralation between African Media and Standard Bank
Assuming the 90 days trading horizon African Media Entertainment is expected to under-perform the Standard Bank. In addition to that, African Media is 2.98 times more volatile than Standard Bank Group. It trades about -0.11 of its total potential returns per unit of risk. Standard Bank Group is currently generating about -0.11 per unit of volatility. If you would invest 940,000 in Standard Bank Group on November 28, 2024 and sell it today you would lose (15,000) from holding Standard Bank Group or give up 1.6% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
African Media Entertainment vs. Standard Bank Group
Performance |
| Timeline |
| African Media Entert |
| Standard Bank Group |
African Media and Standard Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with African Media and Standard Bank
The main advantage of trading using opposite African Media and Standard Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if African Media position performs unexpectedly, Standard 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 Standard Bank will offset losses from the drop in Standard Bank's long position.| African Media vs. City Lodge Hotels | African Media vs. Astoria Investments | African Media vs. Zeder Investments | African Media vs. Hosken Consolidated Investments |
| Standard Bank vs. HomeChoice Investments | Standard Bank vs. Advtech | Standard Bank vs. British American Tobacco | Standard Bank vs. Safari Investments RSA |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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