Correlation Between Capitec Bank and AECI
Can any of the company-specific risk be diversified away by investing in both Capitec Bank and AECI 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 AECI 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 AECI, you can compare the effects of market volatilities on Capitec Bank and AECI 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 AECI. Check out your portfolio center. Please also check ongoing floating volatility patterns of Capitec Bank and AECI.
Diversification Opportunities for Capitec Bank and AECI
-0.89 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Capitec and AECI is -0.89. Overlapping area represents the amount of risk that can be diversified away by holding Capitec Bank Holdings and AECI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AECI 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 AECI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AECI has no effect on the direction of Capitec Bank i.e., Capitec Bank and AECI go up and down completely randomly.
Pair Corralation between Capitec Bank and AECI
Assuming the 90 days trading horizon Capitec Bank Holdings is expected to generate 1.1 times more return on investment than AECI. However, Capitec Bank is 1.1 times more volatile than AECI. It trades about 0.08 of its potential returns per unit of risk. AECI is currently generating about 0.02 per unit of risk. If you would invest 18,056,200 in Capitec Bank Holdings on August 24, 2024 and sell it today you would earn a total of 15,713,800 from holding Capitec Bank Holdings or generate 87.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Capitec Bank Holdings vs. AECI
Performance |
| Timeline |
| Capitec Bank Holdings |
| AECI |
Capitec Bank and AECI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Capitec Bank and AECI
The main advantage of trading using opposite Capitec Bank and AECI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Capitec Bank position performs unexpectedly, AECI 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 AECI will offset losses from the drop in AECI's long position.| Capitec Bank vs. Brimstone Investment | Capitec Bank vs. African Media Entertainment | Capitec Bank vs. Deneb Investments | Capitec Bank vs. CA Sales Holdings |
| AECI vs. Harmony Gold Mining | AECI vs. Capitec Bank Holdings | AECI vs. Kumba Iron Ore | AECI vs. E Media 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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