Correlation Between Bank of East Asia Limited and Standard Bank
Can any of the company-specific risk be diversified away by investing in both Bank of East Asia Limited 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 Bank of East Asia Limited and Standard Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bank of East and Standard Bank Group, you can compare the effects of market volatilities on Bank of East Asia Limited 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 Bank of East Asia Limited with a short position of Standard Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of East Asia Limited and Standard Bank.
Diversification Opportunities for Bank of East Asia Limited and Standard Bank
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Bank and Standard is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Bank of East 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 Bank of East Asia Limited 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 Bank of East 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 Bank of East Asia Limited i.e., Bank of East Asia Limited and Standard Bank go up and down completely randomly.
Pair Corralation between Bank of East Asia Limited and Standard Bank
Assuming the 90 days horizon Bank of East is expected to under-perform the Standard Bank. But the pink sheet apears to be less risky and, when comparing its historical volatility, Bank of East is 1.17 times less risky than Standard Bank. The pink sheet trades about -0.15 of its potential returns per unit of risk. The Standard Bank Group is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest 1,380 in Standard Bank Group on August 28, 2024 and sell it today you would lose (26.00) from holding Standard Bank Group or give up 1.88% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank of East vs. Standard Bank Group
Performance |
| Timeline |
| Bank of East Asia Limited |
| Standard Bank Group |
Bank of East Asia Limited and Standard Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of East Asia Limited and Standard Bank
The main advantage of trading using opposite Bank of East Asia Limited and Standard Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of East Asia Limited 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.| Bank of East Asia Limited vs. First Foundation | Bank of East Asia Limited vs. Metropolitan Bank Holding | Bank of East Asia Limited vs. MT Bank | Bank of East Asia Limited vs. Regions Financial |
| Standard Bank vs. Bank Central Asia | Standard Bank vs. Nedbank Group | Standard Bank vs. Kasikornbank Public Co | Standard Bank vs. KBC Groep NV |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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