Correlation Between Brimstone Investment and Capitec Bank
Can any of the company-specific risk be diversified away by investing in both Brimstone Investment and Capitec 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 Brimstone Investment and Capitec Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Brimstone Investment and Capitec Bank Holdings, you can compare the effects of market volatilities on Brimstone Investment and Capitec 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 Brimstone Investment with a short position of Capitec Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brimstone Investment and Capitec Bank.
Diversification Opportunities for Brimstone Investment and Capitec Bank
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Brimstone and Capitec is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Brimstone Investment and Capitec Bank Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capitec Bank Holdings and Brimstone Investment 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 Brimstone Investment are associated (or correlated) with Capitec Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capitec Bank Holdings has no effect on the direction of Brimstone Investment i.e., Brimstone Investment and Capitec Bank go up and down completely randomly.
Pair Corralation between Brimstone Investment and Capitec Bank
Assuming the 90 days trading horizon Brimstone Investment is expected to generate 3.61 times less return on investment than Capitec Bank. In addition to that, Brimstone Investment is 2.57 times more volatile than Capitec Bank Holdings. It trades about 0.01 of its total potential returns per unit of risk. Capitec Bank Holdings is currently generating about 0.11 per unit of volatility. If you would invest 19,324,300 in Capitec Bank Holdings on October 21, 2024 and sell it today you would earn a total of 10,894,100 from holding Capitec Bank Holdings or generate 56.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.65% |
| Values | Daily Returns |
Brimstone Investment vs. Capitec Bank Holdings
Performance |
| Timeline |
| Brimstone Investment |
| Capitec Bank Holdings |
Brimstone Investment and Capitec Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Brimstone Investment and Capitec Bank
The main advantage of trading using opposite Brimstone Investment and Capitec Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Brimstone Investment position performs unexpectedly, Capitec 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 Capitec Bank will offset losses from the drop in Capitec Bank's long position.| Brimstone Investment vs. HomeChoice Investments | Brimstone Investment vs. MC Mining | Brimstone Investment vs. City Lodge Hotels | Brimstone Investment vs. Allied Electronics |
| Capitec Bank vs. Datatec | Capitec Bank vs. Brimstone Investment | Capitec Bank vs. Astral Foods | Capitec Bank vs. HomeChoice 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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