Correlation Between Capitec Bank and Deneb Investments
Can any of the company-specific risk be diversified away by investing in both Capitec Bank and Deneb Investments 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 Deneb Investments 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 Deneb Investments, you can compare the effects of market volatilities on Capitec Bank and Deneb Investments 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 Deneb Investments. Check out your portfolio center. Please also check ongoing floating volatility patterns of Capitec Bank and Deneb Investments.
Diversification Opportunities for Capitec Bank and Deneb Investments
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Capitec and Deneb is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Capitec Bank Holdings and Deneb Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Deneb Investments 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 Deneb Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Deneb Investments has no effect on the direction of Capitec Bank i.e., Capitec Bank and Deneb Investments go up and down completely randomly.
Pair Corralation between Capitec Bank and Deneb Investments
Assuming the 90 days trading horizon Capitec Bank Holdings is expected to under-perform the Deneb Investments. But the stock apears to be less risky and, when comparing its historical volatility, Capitec Bank Holdings is 2.1 times less risky than Deneb Investments. The stock trades about -0.22 of its potential returns per unit of risk. The Deneb Investments is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 20,200 in Deneb Investments on November 4, 2024 and sell it today you would earn a total of 1,800 from holding Deneb Investments or generate 8.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Capitec Bank Holdings vs. Deneb Investments
Performance |
| Timeline |
| Capitec Bank Holdings |
| Deneb Investments |
Capitec Bank and Deneb Investments Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Capitec Bank and Deneb Investments
The main advantage of trading using opposite Capitec Bank and Deneb Investments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Capitec Bank position performs unexpectedly, Deneb Investments 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 Deneb Investments will offset losses from the drop in Deneb Investments' long position.| Capitec Bank vs. Allied Electronics | Capitec Bank vs. Mantengu Mining | Capitec Bank vs. Boxer Retail | Capitec Bank vs. CA Sales Holdings |
| Deneb Investments vs. Trematon Capital Investments | Deneb Investments vs. Brimstone Investment | Deneb Investments vs. Reinet Investments SCA | Deneb Investments vs. Kap Industrial 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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