Correlation Between CEC AFRICA and STANDARD CHARTERED
Can any of the company-specific risk be diversified away by investing in both CEC AFRICA and STANDARD CHARTERED 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 CEC AFRICA and STANDARD CHARTERED into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CEC AFRICA INVESTMENTS and STANDARD CHARTERED BANK, you can compare the effects of market volatilities on CEC AFRICA and STANDARD CHARTERED 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 CEC AFRICA with a short position of STANDARD CHARTERED. Check out your portfolio center. Please also check ongoing floating volatility patterns of CEC AFRICA and STANDARD CHARTERED.
Diversification Opportunities for CEC AFRICA and STANDARD CHARTERED
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between CEC and STANDARD is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding CEC AFRICA INVESTMENTS and STANDARD CHARTERED BANK in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on STANDARD CHARTERED BANK and CEC AFRICA 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 CEC AFRICA INVESTMENTS are associated (or correlated) with STANDARD CHARTERED. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of STANDARD CHARTERED BANK has no effect on the direction of CEC AFRICA i.e., CEC AFRICA and STANDARD CHARTERED go up and down completely randomly.
Pair Corralation between CEC AFRICA and STANDARD CHARTERED
Assuming the 90 days trading horizon CEC AFRICA INVESTMENTS is expected to generate 0.99 times more return on investment than STANDARD CHARTERED. However, CEC AFRICA INVESTMENTS is 1.01 times less risky than STANDARD CHARTERED. It trades about -0.21 of its potential returns per unit of risk. STANDARD CHARTERED BANK is currently generating about -0.46 per unit of risk. If you would invest 65.00 in CEC AFRICA INVESTMENTS on August 31, 2024 and sell it today you would lose (1.00) from holding CEC AFRICA INVESTMENTS or give up 1.54% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CEC AFRICA INVESTMENTS vs. STANDARD CHARTERED BANK
Performance |
| Timeline |
| CEC AFRICA INVESTMENTS |
| STANDARD CHARTERED BANK |
CEC AFRICA and STANDARD CHARTERED Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CEC AFRICA and STANDARD CHARTERED
The main advantage of trading using opposite CEC AFRICA and STANDARD CHARTERED positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CEC AFRICA position performs unexpectedly, STANDARD CHARTERED 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 CHARTERED will offset losses from the drop in STANDARD CHARTERED's long position.| CEC AFRICA vs. STANDARD CHARTERED BANK | CEC AFRICA vs. AECI MINING EXPLOSIVES | CEC AFRICA vs. ZAMBIA SUGAR PLC | CEC AFRICA vs. BRITISH AMERICAN TOBACCO ZAMBIA |
| STANDARD CHARTERED vs. AECI MINING EXPLOSIVES | STANDARD CHARTERED vs. ZAMBIA SUGAR PLC | STANDARD CHARTERED vs. BRITISH AMERICAN TOBACCO ZAMBIA | STANDARD CHARTERED vs. AIRTEL NETWORKS ZAMBIA |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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