Correlation Between Capitec Bank and Orion Gold
Can any of the company-specific risk be diversified away by investing in both Capitec Bank and Orion Gold 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 Orion Gold 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 Orion Gold NL, you can compare the effects of market volatilities on Capitec Bank and Orion Gold 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 Orion Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Capitec Bank and Orion Gold.
Diversification Opportunities for Capitec Bank and Orion Gold
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Capitec and Orion is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Capitec Bank Holdings and Orion Gold NL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Orion Gold NL 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 Orion Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Orion Gold NL has no effect on the direction of Capitec Bank i.e., Capitec Bank and Orion Gold go up and down completely randomly.
Pair Corralation between Capitec Bank and Orion Gold
Assuming the 90 days trading horizon Capitec Bank Holdings is expected to generate 0.4 times more return on investment than Orion Gold. However, Capitec Bank Holdings is 2.5 times less risky than Orion Gold. It trades about 0.08 of its potential returns per unit of risk. Orion Gold NL is currently generating about 0.02 per unit of risk. If you would invest 17,953,500 in Capitec Bank Holdings on September 3, 2024 and sell it today you would earn a total of 14,658,300 from holding Capitec Bank Holdings or generate 81.65% 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. Orion Gold NL
Performance |
| Timeline |
| Capitec Bank Holdings |
| Orion Gold NL |
Capitec Bank and Orion Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Capitec Bank and Orion Gold
The main advantage of trading using opposite Capitec Bank and Orion Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Capitec Bank position performs unexpectedly, Orion Gold 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 Orion Gold will offset losses from the drop in Orion Gold's long position.| Capitec Bank vs. ABSA Bank Limited | Capitec Bank vs. Investec | Capitec Bank vs. Sasol Ltd Bee | Capitec Bank vs. Centaur Bci Balanced |
| Orion Gold vs. Kumba Iron Ore | Orion Gold vs. Trematon Capital Investments | Orion Gold vs. Capitec Bank Holdings | Orion Gold vs. Deneb Investments |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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