Correlation Between First Community and Standard Bank
Can any of the company-specific risk be diversified away by investing in both First Community 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 First Community and Standard Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Community and Standard Bank Group, you can compare the effects of market volatilities on First Community 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 First Community with a short position of Standard Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Community and Standard Bank.
Diversification Opportunities for First Community and Standard Bank
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between First and Standard is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding First Community 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 First Community 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 First Community 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 First Community i.e., First Community and Standard Bank go up and down completely randomly.
Pair Corralation between First Community and Standard Bank
Given the investment horizon of 90 days First Community is expected to generate 0.38 times more return on investment than Standard Bank. However, First Community is 2.61 times less risky than Standard Bank. It trades about 0.13 of its potential returns per unit of risk. Standard Bank Group is currently generating about 0.02 per unit of risk. If you would invest 850.00 in First Community on August 29, 2024 and sell it today you would earn a total of 45.00 from holding First Community or generate 5.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Community vs. Standard Bank Group
Performance |
| Timeline |
| First Community |
| Standard Bank Group |
First Community and Standard Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Community and Standard Bank
The main advantage of trading using opposite First Community and Standard Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Community 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.| First Community vs. CCSB Financial Corp | First Community vs. Delhi Bank Corp | First Community vs. BEO Bancorp | First Community vs. First Community Financial |
| Standard Bank vs. Bank Central Asia | Standard Bank vs. Nedbank Group | Standard Bank vs. Kasikornbank Public Co | Standard Bank vs. KBC Groep NV |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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