Correlation Between Capitec Bank and Ascendis Health
Can any of the company-specific risk be diversified away by investing in both Capitec Bank and Ascendis Health 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 Ascendis Health 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 Ascendis Health, you can compare the effects of market volatilities on Capitec Bank and Ascendis Health 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 Ascendis Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Capitec Bank and Ascendis Health.
Diversification Opportunities for Capitec Bank and Ascendis Health
0.19 | Correlation Coefficient |
Average diversification
The 3 months correlation between Capitec and Ascendis is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Capitec Bank Holdings and Ascendis Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ascendis Health 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 Ascendis Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ascendis Health has no effect on the direction of Capitec Bank i.e., Capitec Bank and Ascendis Health go up and down completely randomly.
Pair Corralation between Capitec Bank and Ascendis Health
Assuming the 90 days trading horizon Capitec Bank is expected to generate 5.77 times less return on investment than Ascendis Health. But when comparing it to its historical volatility, Capitec Bank Holdings is 3.03 times less risky than Ascendis Health. It trades about 0.04 of its potential returns per unit of risk. Ascendis Health is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 7,200 in Ascendis Health on September 2, 2024 and sell it today you would earn a total of 300.00 from holding Ascendis Health or generate 4.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Capitec Bank Holdings vs. Ascendis Health
Performance |
| Timeline |
| Capitec Bank Holdings |
| Ascendis Health |
Capitec Bank and Ascendis Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Capitec Bank and Ascendis Health
The main advantage of trading using opposite Capitec Bank and Ascendis Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Capitec Bank position performs unexpectedly, Ascendis Health 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 Ascendis Health will offset losses from the drop in Ascendis Health's long position.| Capitec Bank vs. Frontier Transport Holdings | Capitec Bank vs. Hosken Consolidated Investments | Capitec Bank vs. Zeder Investments | Capitec Bank vs. Afine Investments |
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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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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