Correlation Between Capitec Bank and Trematon Capital
Can any of the company-specific risk be diversified away by investing in both Capitec Bank and Trematon Capital 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 Trematon Capital 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 Trematon Capital Investments, you can compare the effects of market volatilities on Capitec Bank and Trematon Capital 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 Trematon Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Capitec Bank and Trematon Capital.
Diversification Opportunities for Capitec Bank and Trematon Capital
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Capitec and Trematon is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Capitec Bank Holdings and Trematon Capital Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Trematon Capital Inv 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 Trematon Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Trematon Capital Inv has no effect on the direction of Capitec Bank i.e., Capitec Bank and Trematon Capital go up and down completely randomly.
Pair Corralation between Capitec Bank and Trematon Capital
Assuming the 90 days trading horizon Capitec Bank Holdings is expected to generate 0.37 times more return on investment than Trematon Capital. However, Capitec Bank Holdings is 2.68 times less risky than Trematon Capital. It trades about 0.08 of its potential returns per unit of risk. Trematon Capital Investments is currently generating about 0.01 per unit of risk. If you would invest 17,292,200 in Capitec Bank Holdings on October 21, 2024 and sell it today you would earn a total of 12,926,200 from holding Capitec Bank Holdings or generate 74.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
Capitec Bank Holdings vs. Trematon Capital Investments
Performance |
| Timeline |
| Capitec Bank Holdings |
| Trematon Capital Inv |
Capitec Bank and Trematon Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Capitec Bank and Trematon Capital
The main advantage of trading using opposite Capitec Bank and Trematon Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Capitec Bank position performs unexpectedly, Trematon Capital 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 Trematon Capital will offset losses from the drop in Trematon Capital's long position.| Capitec Bank vs. Datatec | Capitec Bank vs. Brimstone Investment | Capitec Bank vs. Astral Foods | Capitec Bank vs. HomeChoice Investments |
| Trematon Capital vs. CA Sales Holdings | Trematon Capital vs. Lesaka Technologies | Trematon Capital vs. Master Drilling Group | Trematon Capital vs. Reinet Investments SCA |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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