Correlation Between CA Sales and Standard Bank
Can any of the company-specific risk be diversified away by investing in both CA Sales 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 CA Sales and Standard Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CA Sales Holdings and Standard Bank Group, you can compare the effects of market volatilities on CA Sales 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 CA Sales with a short position of Standard Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of CA Sales and Standard Bank.
Diversification Opportunities for CA Sales and Standard Bank
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between CAA and Standard is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding CA Sales Holdings 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 CA Sales 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 CA Sales Holdings 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 CA Sales i.e., CA Sales and Standard Bank go up and down completely randomly.
Pair Corralation between CA Sales and Standard Bank
Assuming the 90 days trading horizon CA Sales Holdings is expected to generate 1.34 times more return on investment than Standard Bank. However, CA Sales is 1.34 times more volatile than Standard Bank Group. It trades about 0.02 of its potential returns per unit of risk. Standard Bank Group is currently generating about -0.06 per unit of risk. If you would invest 157,000 in CA Sales Holdings on August 30, 2024 and sell it today you would earn a total of 1,100 from holding CA Sales Holdings or generate 0.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CA Sales Holdings vs. Standard Bank Group
Performance |
| Timeline |
| CA Sales Holdings |
| Standard Bank Group |
CA Sales and Standard Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CA Sales and Standard Bank
The main advantage of trading using opposite CA Sales and Standard Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CA Sales 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.| CA Sales vs. Growthpoint Properties | CA Sales vs. AfricaRhodium ETF | CA Sales vs. CoreShares Preference Share | CA Sales vs. CoreShares TotalWldStock ETF |
| Standard Bank vs. AfricaRhodium ETF | Standard Bank vs. CoreShares Preference Share | Standard Bank vs. CoreShares TotalWldStock ETF | Standard Bank vs. Shoprite Holdings |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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