Correlation Between Datatec and Capitec Bank
Can any of the company-specific risk be diversified away by investing in both Datatec and Capitec 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 Datatec and Capitec Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Datatec and Capitec Bank Holdings, you can compare the effects of market volatilities on Datatec and Capitec 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 Datatec with a short position of Capitec Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Datatec and Capitec Bank.
Diversification Opportunities for Datatec and Capitec Bank
-0.72 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Datatec and Capitec is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Datatec and Capitec Bank Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capitec Bank Holdings and Datatec 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 Datatec are associated (or correlated) with Capitec Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capitec Bank Holdings has no effect on the direction of Datatec i.e., Datatec and Capitec Bank go up and down completely randomly.
Pair Corralation between Datatec and Capitec Bank
Assuming the 90 days trading horizon Datatec is expected to generate 1.12 times less return on investment than Capitec Bank. In addition to that, Datatec is 1.1 times more volatile than Capitec Bank Holdings. It trades about 0.06 of its total potential returns per unit of risk. Capitec Bank Holdings is currently generating about 0.08 per unit of volatility. If you would invest 16,894,400 in Capitec Bank Holdings on November 2, 2024 and sell it today you would earn a total of 12,567,300 from holding Capitec Bank Holdings or generate 74.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Datatec vs. Capitec Bank Holdings
Performance |
| Timeline |
| Datatec |
| Capitec Bank Holdings |
Datatec and Capitec Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Datatec and Capitec Bank
The main advantage of trading using opposite Datatec and Capitec Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Datatec position performs unexpectedly, Capitec 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 Capitec Bank will offset losses from the drop in Capitec Bank's long position.| Datatec vs. Standard Bank Group | Datatec vs. Hosken Consolidated Investments | Datatec vs. Safari Investments RSA | Datatec vs. Reinet Investments SCA |
| Capitec Bank vs. Master Drilling Group | Capitec Bank vs. Life Healthcare | Capitec Bank vs. Frontier Transport Holdings | Capitec Bank 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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