Correlation Between Capitec Bank and Netcare
Can any of the company-specific risk be diversified away by investing in both Capitec Bank and Netcare 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 Netcare 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 Netcare, you can compare the effects of market volatilities on Capitec Bank and Netcare 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 Netcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Capitec Bank and Netcare.
Diversification Opportunities for Capitec Bank and Netcare
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Capitec and Netcare is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Capitec Bank Holdings and Netcare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Netcare 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 Netcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Netcare has no effect on the direction of Capitec Bank i.e., Capitec Bank and Netcare go up and down completely randomly.
Pair Corralation between Capitec Bank and Netcare
Assuming the 90 days trading horizon Capitec Bank Holdings is expected to generate 0.99 times more return on investment than Netcare. However, Capitec Bank Holdings is 1.01 times less risky than Netcare. It trades about 0.22 of its potential returns per unit of risk. Netcare is currently generating about 0.14 per unit of risk. If you would invest 22,131,200 in Capitec Bank Holdings on September 1, 2024 and sell it today you would earn a total of 10,480,600 from holding Capitec Bank Holdings or generate 47.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.22% |
| Values | Daily Returns |
Capitec Bank Holdings vs. Netcare
Performance |
| Timeline |
| Capitec Bank Holdings |
| Netcare |
Capitec Bank and Netcare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Capitec Bank and Netcare
The main advantage of trading using opposite Capitec Bank and Netcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Capitec Bank position performs unexpectedly, Netcare 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 Netcare will offset losses from the drop in Netcare's 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 |
| Netcare vs. HomeChoice Investments | Netcare vs. We Buy Cars | Netcare vs. Ascendis Health | Netcare vs. Astral Foods |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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