Correlation Between HOME AFRIKA and STANDARD CHARTERED
Can any of the company-specific risk be diversified away by investing in both HOME AFRIKA and STANDARD CHARTERED 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 HOME AFRIKA and STANDARD CHARTERED into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HOME AFRIKA LTD and STANDARD CHARTERED BANK, you can compare the effects of market volatilities on HOME AFRIKA and STANDARD CHARTERED 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 HOME AFRIKA with a short position of STANDARD CHARTERED. Check out your portfolio center. Please also check ongoing floating volatility patterns of HOME AFRIKA and STANDARD CHARTERED.
Diversification Opportunities for HOME AFRIKA and STANDARD CHARTERED
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between HOME and STANDARD is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding HOME AFRIKA LTD and STANDARD CHARTERED BANK in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on STANDARD CHARTERED BANK and HOME AFRIKA 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 HOME AFRIKA LTD are associated (or correlated) with STANDARD CHARTERED. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of STANDARD CHARTERED BANK has no effect on the direction of HOME AFRIKA i.e., HOME AFRIKA and STANDARD CHARTERED go up and down completely randomly.
Pair Corralation between HOME AFRIKA and STANDARD CHARTERED
Assuming the 90 days trading horizon HOME AFRIKA LTD is expected to generate 4.36 times more return on investment than STANDARD CHARTERED. However, HOME AFRIKA is 4.36 times more volatile than STANDARD CHARTERED BANK. It trades about 0.13 of its potential returns per unit of risk. STANDARD CHARTERED BANK is currently generating about 0.33 per unit of risk. If you would invest 32.00 in HOME AFRIKA LTD on September 4, 2024 and sell it today you would earn a total of 3.00 from holding HOME AFRIKA LTD or generate 9.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
HOME AFRIKA LTD vs. STANDARD CHARTERED BANK
Performance |
| Timeline |
| HOME AFRIKA LTD |
| STANDARD CHARTERED BANK |
HOME AFRIKA and STANDARD CHARTERED Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HOME AFRIKA and STANDARD CHARTERED
The main advantage of trading using opposite HOME AFRIKA and STANDARD CHARTERED positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HOME AFRIKA position performs unexpectedly, STANDARD CHARTERED 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 CHARTERED will offset losses from the drop in STANDARD CHARTERED's long position.| HOME AFRIKA vs. EQUITY GROUP HOLDINGS | HOME AFRIKA vs. ABSA BANK OF | HOME AFRIKA vs. BRITISH AMERICAN TOBACCO | HOME AFRIKA vs. CO OPERATIVE BANK OF |
| STANDARD CHARTERED vs. EQUITY GROUP HOLDINGS | STANDARD CHARTERED vs. ABSA BANK OF | STANDARD CHARTERED vs. BRITISH AMERICAN TOBACCO | STANDARD CHARTERED vs. CO OPERATIVE BANK OF |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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