Correlation Between Capitec Bank and Datatec
Can any of the company-specific risk be diversified away by investing in both Capitec Bank and Datatec 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 Datatec 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 Datatec, you can compare the effects of market volatilities on Capitec Bank and Datatec 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 Datatec. Check out your portfolio center. Please also check ongoing floating volatility patterns of Capitec Bank and Datatec.
Diversification Opportunities for Capitec Bank and Datatec
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Capitec and Datatec is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Capitec Bank Holdings and Datatec in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Datatec 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 Datatec. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Datatec has no effect on the direction of Capitec Bank i.e., Capitec Bank and Datatec go up and down completely randomly.
Pair Corralation between Capitec Bank and Datatec
Assuming the 90 days trading horizon Capitec Bank Holdings is expected to generate 0.99 times more return on investment than Datatec. However, Capitec Bank Holdings is 1.01 times less risky than Datatec. It trades about 0.14 of its potential returns per unit of risk. Datatec is currently generating about 0.04 per unit of risk. If you would invest 13,894,000 in Capitec Bank Holdings on August 31, 2024 and sell it today you would earn a total of 18,717,800 from holding Capitec Bank Holdings or generate 134.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Capitec Bank Holdings vs. Datatec
Performance |
| Timeline |
| Capitec Bank Holdings |
| Datatec |
Capitec Bank and Datatec Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Capitec Bank and Datatec
The main advantage of trading using opposite Capitec Bank and Datatec positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Capitec Bank position performs unexpectedly, Datatec 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 Datatec will offset losses from the drop in Datatec's long position.| Capitec Bank vs. Safari Investments RSA | Capitec Bank vs. Afine Investments | Capitec Bank vs. eMedia Holdings Limited | Capitec Bank vs. Deneb 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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