Correlation Between Capitec Bank and AfroCentric Investment
Can any of the company-specific risk be diversified away by investing in both Capitec Bank and AfroCentric Investment 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 Capitec Bank and AfroCentric Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Capitec Bank Holdings and AfroCentric Investment Corp, you can compare the effects of market volatilities on Capitec Bank and AfroCentric Investment 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 Capitec Bank with a short position of AfroCentric Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Capitec Bank and AfroCentric Investment.
Diversification Opportunities for Capitec Bank and AfroCentric Investment
-0.16 | Correlation Coefficient |
Good diversification
The 3 months correlation between Capitec and AfroCentric is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Capitec Bank Holdings and AfroCentric Investment Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AfroCentric Investment and Capitec Bank 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 Capitec Bank Holdings are associated (or correlated) with AfroCentric Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AfroCentric Investment has no effect on the direction of Capitec Bank i.e., Capitec Bank and AfroCentric Investment go up and down completely randomly.
Pair Corralation between Capitec Bank and AfroCentric Investment
Assuming the 90 days trading horizon Capitec Bank Holdings is expected to generate 0.4 times more return on investment than AfroCentric Investment. However, Capitec Bank Holdings is 2.48 times less risky than AfroCentric Investment. It trades about 0.08 of its potential returns per unit of risk. AfroCentric Investment Corp is currently generating about -0.02 per unit of risk. If you would invest 17,654,800 in Capitec Bank Holdings on October 11, 2024 and sell it today you would earn a total of 13,468,700 from holding Capitec Bank Holdings or generate 76.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Capitec Bank Holdings vs. AfroCentric Investment Corp
Performance |
| Timeline |
| Capitec Bank Holdings |
| AfroCentric Investment |
Capitec Bank and AfroCentric Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Capitec Bank and AfroCentric Investment
The main advantage of trading using opposite Capitec Bank and AfroCentric Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Capitec Bank position performs unexpectedly, AfroCentric Investment 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 AfroCentric Investment will offset losses from the drop in AfroCentric Investment's long position.| Capitec Bank vs. Astral Foods | Capitec Bank vs. Safari Investments RSA | Capitec Bank vs. RCL Foods | Capitec Bank vs. We Buy Cars |
| AfroCentric Investment vs. Capitec Bank Holdings | AfroCentric Investment vs. Zeder Investments | AfroCentric Investment vs. Frontier Transport Holdings | AfroCentric Investment 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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