Correlation Between Capitec Bank and Astral Foods
Can any of the company-specific risk be diversified away by investing in both Capitec Bank and Astral Foods 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 Astral Foods 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 Astral Foods, you can compare the effects of market volatilities on Capitec Bank and Astral Foods 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 Astral Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of Capitec Bank and Astral Foods.
Diversification Opportunities for Capitec Bank and Astral Foods
-0.07 | Correlation Coefficient |
Good diversification
The 3 months correlation between Capitec and Astral is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Capitec Bank Holdings and Astral Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Astral Foods 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 Astral Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Astral Foods has no effect on the direction of Capitec Bank i.e., Capitec Bank and Astral Foods go up and down completely randomly.
Pair Corralation between Capitec Bank and Astral Foods
Assuming the 90 days trading horizon Capitec Bank is expected to generate 31.53 times less return on investment than Astral Foods. But when comparing it to its historical volatility, Capitec Bank Holdings is 52.53 times less risky than Astral Foods. It trades about 0.14 of its potential returns per unit of risk. Astral Foods is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 1,500,100 in Astral Foods on September 1, 2024 and sell it today you would earn a total of 399,900 from holding Astral Foods or generate 26.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.2% |
| Values | Daily Returns |
Capitec Bank Holdings vs. Astral Foods
Performance |
| Timeline |
| Capitec Bank Holdings |
| Astral Foods |
Capitec Bank and Astral Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Capitec Bank and Astral Foods
The main advantage of trading using opposite Capitec Bank and Astral Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Capitec Bank position performs unexpectedly, Astral Foods 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 Astral Foods will offset losses from the drop in Astral Foods' long position.| Capitec Bank vs. Master Drilling Group | Capitec Bank vs. Safari Investments RSA | Capitec Bank vs. HomeChoice Investments | Capitec Bank vs. Trematon Capital Investments |
| Astral Foods vs. Hosken Consolidated Investments | Astral Foods vs. Astoria Investments | Astral Foods vs. Blue Label Telecoms | Astral Foods vs. Harmony Gold Mining |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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