Correlation Between Capitec Bank and Standard Bank
Can any of the company-specific risk be diversified away by investing in both Capitec Bank and Standard Bank 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 Standard Bank 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 Standard Bank Group, you can compare the effects of market volatilities on Capitec Bank and Standard Bank 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 Standard Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Capitec Bank and Standard Bank.
Diversification Opportunities for Capitec Bank and Standard Bank
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Capitec and Standard is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Capitec Bank Holdings and Standard Bank Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Standard Bank Group 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 Standard Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Standard Bank Group has no effect on the direction of Capitec Bank i.e., Capitec Bank and Standard Bank go up and down completely randomly.
Pair Corralation between Capitec Bank and Standard Bank
Assuming the 90 days trading horizon Capitec Bank Holdings is expected to generate 1.01 times more return on investment than Standard Bank. However, Capitec Bank is 1.01 times more volatile than Standard Bank Group. It trades about 0.22 of its potential returns per unit of risk. Standard Bank Group is currently generating about 0.16 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. Standard Bank Group
Performance |
| Timeline |
| Capitec Bank Holdings |
| Standard Bank Group |
Capitec Bank and Standard Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Capitec Bank and Standard Bank
The main advantage of trading using opposite Capitec Bank and Standard Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Capitec Bank position performs unexpectedly, Standard Bank 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 Standard Bank will offset losses from the drop in Standard Bank'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 |
| Standard Bank vs. Ascendis Health | Standard Bank vs. We Buy Cars | Standard Bank vs. Frontier Transport Holdings | Standard Bank vs. eMedia Holdings Limited |
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.
Other Complementary Tools
| FinTech Suite Use AI to screen and filter profitable investment opportunities | |
| Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios | |
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine | |
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
| Instant Ratings Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance |